EXHIBIT 10.20
POST-COMPLETION AGREEMENT
BETWEEN
FOCAS, INC.
AND
ELECTRIC LIGHTWAVE, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.................................................................................1
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ARTICLE II DESCRIPTION OF TRANSACTION..................................................................8
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2.1 UTILITY AGREEMENTS.................................................................8
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2.2 DELEGATION OF CERTAIN ELI DUTIES TO FOCAS..........................................9
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2.3 ELI DUTIES.........................................................................9
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2.4 LICENSES REVOCABLE.................................................................9
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2.5 REGULATORY APPROVAL................................................................9
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2.6 CONVERSION FROM REVOCABLE LICENSE TO IRREVOCABLE LICENSE..........................10
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2.7 NONEXCLUSIVE USE OF RIGHT OF WAY..................................................10
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2.8 RESERVATION OF CERTAIN UTILITY COMPANY RIGHTS.....................................10
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2.9 UTILITY OPERATIONS................................................................10
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2.10 NO PROPERTY OR POSSESSORY INTEREST................................................11
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2.11 RIGHT OF ENTRY....................................................................11
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2.12 ENTRY CONDITIONS..................................................................12
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2.13 COOPERATION.......................................................................12
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2.14 DISCLAIMER........................................................................12
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2.15 OPERATION OF SYSTEM...............................................................12
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2.16 CABLE ROUTE.......................................................................13
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ARTICLE III TERM.......................................................................................13
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3.1 TERM..............................................................................13
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3.2 TERMINATION OF AGREEMENT BY ELI...................................................13
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ARTICLE IV PAYMENTS...................................................................................14
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4.1 QUARTERLY PAYMENTS................................................................14
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4.2 QUARTERLY PAYMENT DUE DATES.......................................................14
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4.3 SUPPORTING DOCUMENTATION..........................................................14
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4.4 REIMBURSEMENT OF COSTS............................................................14
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4.5 PAYMENT PROCEDURE.................................................................15
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4.6 LATE PAYMENT......................................................................15
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4.7 PERFORMANCE CRITERIA..............................................................15
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4.8 SECURITY INTEREST.................................................................17
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ARTICLE V SYSTEM DESIGN..............................................................................17
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5.1 FOCAS DESIGN RESPONSIBILITY.......................................................17
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5.2 ELI DESIGN RESPONSIBILITIES.......................................................18
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5.3 UTILITY COMPANY INFORMATION.......................................................18
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5.4 NOTICE OF ADVERSE CLAIMS..........................................................19
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5.5 WORKING DRAWINGS..................................................................19
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5.6 SCHEDULING........................................................................20
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5.7 WARRANTY OF WORK..................................................................20
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5.8 DESIGN PERFORMANCE COMMENCEMENT...................................................21
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ARTICLE VI CONSTRUCTION...............................................................................21
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6.1 SCOPE OF WORK.....................................................................21
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6.2 REGENERATION FACILITIES...........................................................21
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6.3 WORK STANDARDS....................................................................21
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6.4 TIME..............................................................................22
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6.5 PERMITS AND APPROVALS.............................................................22
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6.6 SYSTEM MATERIALS..................................................................22
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6.7 INTERFACE BETWEEN FOCAS AND ELI...................................................22
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6.8 TITLE AND RISK OF LOSS............................................................23
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6.9 SYSTEM WARRANTIES.................................................................23
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6.10 USE OF CONTRACTORS................................................................23
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6.11 INSPECTION OF CONSTRUCTION........................................................24
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6.12 AS-BUILT DRAWINGS.................................................................25
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6.13 COMPLETION OF SYSTEM CONSTRUCTION.................................................25
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6.14 WARRANTY OF WORK..................................................................26
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6.15 CONSTRUCTION PERFORMANCE COMMENCEMENT.............................................26
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ARTICLE VII PROPERTY RIGHTS, OBLIGATIONS AND MAINTENANCE...............................................26
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7.1 AVOIDANCE OF ENCUMBRANCES.........................................................26
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7.2 PAYMENT OF AD VALOREM TAXES.......................................................27
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7.3 SALES OR USE TAXES................................................................27
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7.4 LIENS.............................................................................27
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7.5 DISCONTINUANCE OR RELOCATION......................................................28
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7.6 RELOCATION OF CABLE...............................................................28
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7.7 DESIGN AND INSTALLATION OF RELOCATED FACILITIES...................................28
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7.8 UTILITY COMPANY MAINTENANCE RESPONSIBILITIES......................................28
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7.9 MAINTENANCE OF REGENERATION FACILITIES AND SYSTEM ELECTRONICS.....................29
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7.10 RESTORATION PLANS.................................................................29
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7.11 PERFORMANCE COMMENCEMENT..........................................................29
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ARTICLE VIII REPRESENTATIONS, WARRANTIES AND COVENANTS..................................................29
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8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF ELI..................................29
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8.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF FOCAS................................31
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8.3 CONFIDENTIALITY...................................................................32
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8.4 COOPERATION.......................................................................34
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8.5 REGULATORY COMPLIANCE.............................................................35
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8.6 CERTIFICATES......................................................................35
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8.7 INDEPENDENT STATUS................................................................35
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8.8 TRANSACTIONS WITH AFFILIATES......................................................35
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8.9 FURTHER ASSURANCES................................................................35
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8.10 AUDIT RIGHTS......................................................................35
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8.11 INTERFERENCE......................................................................36
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8.12 INDEPENDENT SYSTEM OPERATOR.......................................................36
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8.13 PERFORMANCE IN STEAD..............................................................36
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8.14 UTILITY AGREEMENTS................................................................36
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ARTICLE IX INSURANCE..................................................................................36
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9.1 REQUIRED INSURANCE COVERAGE.......................................................36
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9.2 GENERAL CONDITIONS................................................................37
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9.3 EVIDENCE OF INSURANCE.............................................................37
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9.4 BLANKET POLICIES..................................................................38
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9.5 SELF-INSURANCE....................................................................38
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ARTICLE X ASSIGNMENT AND OTHER TRANSFERS.............................................................38
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10.1 TRANSFERS.........................................................................38
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10.2 FINANCING.........................................................................39
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10.3 RECOGNITION OF TRANSFEREES........................................................39
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10.4 NO ASSUMPTION OR RELEASE..........................................................39
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10.5 MERGERS AND ACQUISITIONS..........................................................39
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ARTICLE XI CONDEMNATION...............................................................................39
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11.1 TAKING............................................................................39
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11.2 NOTICE OF TAKING..................................................................40
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ARTICLE XII ENVIRONMENTAL HAZARD LIABILITY.............................................................40
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12.1 RESPONSIBILITIES OF FOCAS.........................................................40
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12.2 RESPONSIBILITIES OF ELI...........................................................40
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12.3 WARNING...........................................................................40
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ARTICLE XIII LIABILITY AND INDEMNITY....................................................................41
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13.1 FOCAS INDEMNITY...................................................................41
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13.2 ELI INDEMNITY.....................................................................41
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13.3 NO CONSEQUENTIAL DAMAGES..........................................................41
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13.4 WAIVER OF SUBROGATION.............................................................42
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13.5 DEFENSE OF CLAIMS.................................................................42
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13.6 THIRD-PARTY CLAIMS................................................................42
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13.7 SURVIVAL..........................................................................42
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13.8 APPLICABILITY OF LIABILITY LIMITATIONS............................................42
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13.9 CLAIMS AGAINST THIRD-PARTIES......................................................43
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13.10 ANTI-INDEMNITY STATUTE............................................................43
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ARTICLE XIV FORCE MAJEURE..............................................................................43
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14.1 EXCUSE OF PERFORMANCE.............................................................43
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14.2 DEFINITION........................................................................43
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14.3 CONTINUANCE AFTER FORCE MAJEURE EVENT.............................................44
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ARTICLE XV DEFAULT AND TERMINATION....................................................................45
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15.1 TERMINATION EVENTS................................................................45
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15.2 ACTIONS FOLLOWING OCCURRENCE OF TERMINATION EVENT.................................46
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15.3 NO RELEASE........................................................................47
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ARTICLE XVI DISPUTE RESOLUTION.........................................................................47
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16.1 DISPUTE RESOLUTION................................................................47
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16.2 NEGOTIATION AND MEDIATION.........................................................47
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16.3 CONFIDENTIALITY...................................................................48
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16.4 INJUNCTIVE RELIEF.................................................................48
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16.5 CONTINUING OBLIGATION.............................................................48
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16.6 FAILURE OF MEDIATION..............................................................48
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ARTICLE XVII MISCELLANEOUS..............................................................................48
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17.1 AMENDMENTS........................................................................48
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17.2 BINDING EFFECT....................................................................48
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17.3 WAIVERS...........................................................................48
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17.4 NOTICES...........................................................................49
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17.5 SEVERABILITY......................................................................49
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17.6 INTERPRETATION....................................................................49
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17.7 GOVERNING LAW AND CHOICE OF FORUM.................................................50
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17.8 COMMISSIONS.......................................................................50
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17.9 COUNTERPARTS......................................................................50
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17.10 ATTORNEY FEES.....................................................................50
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17.11 COSTS.............................................................................50
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17.12 NO THIRD-PARTY BENEFICIARIES......................................................50
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17.13 ENTIRE AGREEMENT..................................................................50
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17.14 SURVIVAL..........................................................................51
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17.15 EXHIBITS..........................................................................51
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EXHIBITS
Exhibit "A" Acceptance Testing Standards
Exhibit "B" Cable Route
Exhibit "C" Cable Specifications
Exhibit "D" Performance Criteria
Exhibit "E" Revenue Sharing Route
Exhibit "F" Utility Company Agreements
Exhibit "G" Utility Company Safety Rules
Exhibit "H" Cable Warranty
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POST-COMPLETION AGREEMENT
THIS POST-COMPLETION AGREEMENT ("Agreement") is made and
entered into effective as of the 7th day of May, 1998, by and between FOCAS,
INC., a Delaware corporation ("FOCAS"), and ELECTRIC LIGHTWAVE, INC., a Delaware
corporation ("ELI").
R E C I T A L S :
A. ELI and FOCAS have entered into that certain Initial Optical Fiber
Design and Installation Agreement of even date herewith (the "Initial
Agreement") concerning the initial design and installation of a portion of the
System (as defined herein).
B. ELI desires that FOCAS hold itself available to perform, and to
perform as necessary, certain post-completion service with respect to the
System.
C. FOCAS, upon the terms, covenants and conditions contained in this
Agreement, is willing to hold itself available to perform, and to perform, such
post-closing services.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement, and for other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, FOCAS and ELI agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
specified below:
"Acceptance of Construction" means the written notification from ELI to
FOCAS, pursuant to Section 6.11, that specified work has been inspected by ELI
and found to have been performed substantially in accordance with the
requirements of this Agreement.
"Acceptance Testing Standards" means ELI's Acceptance Testing Standards
set forth on Exhibit "A" attached to and incorporated in this Agreement by
reference.
"Ad Valorem Taxes" means ad valorem property taxes, special
assessments, local improvement district levies and other levies assessed against
the System or the Right of Way.
"Affected Portion" means any portion of the System that is or may: (1)
be affected by a Taking; (2) become the subject of a lien or transfer; or (3) be
damaged or destroyed as the result of the occurrence of an event of casualty.
"Affiliate" means, with respect to either FOCAS or ELI, any corporation
or other entity that controls such party, is controlled by such party, or is
with such party under common control of another entity.
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"Approvals" means all permits, approvals and licenses from all
government authorities having jurisdiction or approval rights with respect to:
(1) the construction and installation of the System; and (2) the use and
occupation of any portion of the Right of Way along the Cable Route where the
System is to be located or to be constructed.
"Approved System Segment" means a System Segment for which Working
Drawings have been approved under the terms of this Agreement for construction
and installation of the Cable, the Cable Accessories, the Connecting Points and,
as applicable, the Regeneration Facilities, the System Electronics and other
facilities and equipment associated with the Approved System Segment.
"Cable" means one or more optical fiber telecommunications cables
containing single mode, nondispersion shifted optical fibers to be installed
along the Cable Route pursuant to the terms of this Agreement.
"Cable Accessories" means all hardware and appurtenances necessary for
the attachment of the Cable to the Towers.
"Cable Route" means the corridor in which the Cable for the System will
be deployed. An approximate location of the Cable Route is described on Exhibit
"B" attached to and incorporated in this Agreement by reference.
"Cable Specifications" means the drawings and specifications regarding
the Cable, the Cable Accessories, and related hardware and materials to be
employed in the installation and splicing of the Cable. A copy of the Cable
Specifications is attached to and incorporated by reference in this Agreement as
Exhibit "C."
"Cable Use License" means the exclusive right to use the Commercial
Fibers contained in the Cable that follows the portion of the Cable Route
contained in a particular Utility Company's service territory granted by the
Utility Company to ELI in a Utility Agreement. A Cable Use License does not
grant to ELI any right to enter upon or to access the Towers, the Substation
Sites or the Right of Way of the Utility Company.
"Chief Engineer" means with respect to FOCAS or ELI, as applicable, the
person designated to be responsible for managerial decision making with respect
to the System and this Agreement and to give technical or managerial advice.
"Commercial Fibers" means the single mode, nondispersion shifted
optical fibers along the entirety of the Revenue Sharing Route in which ELI
holds an exclusive license, lease or IRU.
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"Connecting Point" means any point where the network or facilities of
ELI or any Utility Company connect to the System. The connecting point may be:
(1) a splice point in the Cable created during the installation of the Cable for
a Utility Company to access its Dark Fibers; or (2) a splice point in a
connection box located adjacent to a Regeneration Facility created during the
installation of the Cable for ELI's access to the Commercial Fibers.
"CPUC" means the California Public Utilities Commission.
"Dark Fiber Lease Services" means the leasing of dark Commercial Fibers
or capacity in dark Commercial Fibers by ELI to other telecommunications
carriers or commercial users. Dark Fiber Lease Services do not include the Dark
Fibers leased by ELI to the Utility Companies.
"Dark Fibers" means the single mode, nondispersion shifted optical
fibers in the Cable along the entirety of each Developed System Segment leased
to or reserved by the Utility Companies for the purposes and on the terms
described in the Utility Agreements.
"Developed System Segment" means a System Segment on which all
construction and installation work has been completed and regarding which an
Acceptance of Construction has been issued.
"Effective Date" means the date of execution of this Agreement by FOCAS
and ELI.
"Force Majeure Event" shall have the meaning given in Section 14.2.
"Gross Revenues" means for any accounting period:
(1) The sum of: (a) all revenues billed by ELI for Transport
Services and Dark Fiber Lease Services using the Commercial Fibers over
all or any portion of the entire Revenue Sharing Route; (b) any other
proceeds or value received or receivable by ELI from any condemnation,
eminent domain or other Taking, or from the exploitation or
commercialization of the System or any interest therein, including, but
not limited to, any business interruption insurance proceeds; and (c)
any recoveries obtained by ELI from the Utility Companies or others in
respect of the System. (2) Less the sum of: (a) any billed revenues
from the Revenue Sharing Route actually written off (as determined
consistent with ELI's business practices) net of any cash receipts in
respect of previously written off billed revenue; (b) relocation costs
allocable to and paid by ELI as provided under the terms of any Utility
Agreement resulting from a relocation required by a party other than
ELI, FOCAS or the applicable Utility Company (as described in Section
7.6);
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(c) Maintenance cost reimbursement payments made by ELI to the Utility
Companies under the terms of the Utility Agreements to the extent
provided in Section 7.8; (d) the premiums paid for business
interruption insurance relating to the Revenue Sharing Route, if any;
and (e) the cost of recovering any sum of money from any of the Utility
Companies or any other party if the recovered amount is included in
Gross Revenues (as defined above).
"Hazardous Substances" means any waste, pollutant (as that term is
defined in 42 U.S.C. ss. 9601(33) or in 33 U.S.C. ss. 1362(13) or any successor
statutes thereto), hazardous substance (as that term is defined in 42 U.S.C. ss.
9601(14) or any successor statute thereto), hazardous chemical (as that term is
defined by 29 CFR Part 1910.1200(c) or any successor regulation thereto), toxic
substance, hazardous waste (as that term is defined in 42 U.S.C. ss. 6901 or any
successor statute thereto), radioactive material, special waste, petroleum,
including crude oil or any other hydrocarbon based substance, waste, or
breakdown or decomposition product thereof, or any constituent of any such
substance or waste, including, but not limited to polychlorinated biphenyls, and
asbestos.
"Independent System Operator" means any entity or agency to which any
Utility Company has ceded operational control of its electric transmission
system. An Independent System Operator, among other powers, has authority to
direct the operation of all facilities under its control that affect the
reliability of the electric transmission system and to approve requests to take
electric transmission equipment out of service.
"Initial Agreement" means the agreement described in Recital A of this
Agreement, the terms, covenants and conditions of which are incorporated in this
Agreement by reference.
"Irrevocable License" means a Cable Use License or a Right of Way
License that has been approved by the CPUC as described in Sections 2.5 and 2.6.
"IRU" means the exclusive indefeasible right to use the Cable and the
optical fibers contained therein reserved by ELI under the terms of a Utility
Agreement that grants to ELI a Right of Way License.
"Maintenance" means: (1) routine visual inspection, repair and
maintenance of the Cable, the Cable Accessories, the Towers and the Right of
Way; and (2) disaster restoration.
"Maps" means any drawings or maps that FOCAS, a Utility Company or ELI
is required to prepare, update or submit to any state or federal regulatory
agency as required by applicable statute, rule or regulation.
"Payment Commencement Date" means the day following the Payment
Completion Date as defined in the Initial Agreement.
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"Payment Completion Date" shall have the meaning given in the Initial
Agreement.
"Payment Factor" means the percentage factor identified in Section
4.1(b) which when multiplied against the Gross Revenues for a particular
accounting period produces the Quarterly Payment.
"Performance Commencement Date" means the day following the Performance
Completion Date as defined in the Initial Agreement.
"Performance Criteria" means those minimum annual Gross Revenues
described in Section 4.7 and set forth on Exhibit "D" attached to and
incorporated in this Agreement by reference.
"Qualified Contractor" means a party with whom ELI or FOCAS contracts
to perform any portion of the work for the System over which ELI or FOCAS, as
applicable, pursuant to the terms of this Agreement, has responsibility. Each
such Qualified Contractor must meet the qualification standards imposed by ELI,
FOCAS and the Utility Companies for the type of work to be undertaken by such
Qualified Contractor.
"Quarterly Payments" means the quarterly payments ELI shall make to
FOCAS under the terms of this Agreement as described in Section 4.1.
"Regeneration Facilities" means each building along the Cable Route
housing any System Electronics used by ELI to operate the System, including
terminal and regenerator equipment. For purposes of this Agreement, ELI shall
design, engineer and construct the Regeneration Facilities. In addition, ELI
shall own or lease the physical structure comprising a Regeneration Facility,
and shall own and install all System Electronics used in connection with each
Regeneration Facility.
"Revenue Sharing Route" means the cable path for the Commercial Fibers
over an estimated 1300 Route Miles. An approximate location of the Revenue
Sharing Route is described on Exhibit "E" attached to and incorporated in this
Agreement by reference.
"Revocable Licenses" means a Cable Use License or a Right of Way
License regarding which the CPUC has not granted approval to the applicable
Utility Company to convert such license to an Irrevocable License as described
in Sections 2.5 and 2.6.
"Right of Way" means the Utility Companies' real property and rights
related thereto created pursuant to a grant, easement, lease, license or other
agreement which are used for the Cable Route.
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"Right of Way License" means the nonexclusive right to use the Towers,
Substation Sites and Right of Way of a particular Utility Company to install and
operate the System granted by the Utility Company to ELI under the terms of a
Utility Agreement. The Right of Way License includes the exclusive right to use
the Commercial Fibers on such Utility Company's portion of the Cable Route.
"Route Miles" means the actual miles traversed by the Commercial Fibers
(including spurs) based on the "as-built" drawings described in Section 6.12.
"Scheduled Completion Date" means the date agreed upon by FOCAS and ELI
under the provisions of Section 5.6 by which construction of an Approved System
Segment under the terms of this Agreement should be completed.
"Service Ready Date" means the date when the Commercial Fibers for any
particular System Segment are fully installed and meet the Acceptance Testing
Standards, as evidenced by the issuance of an Acceptance of Construction for
that System Segment.
"Substation Sites" means those areas on or near the Right of Way where
a Utility Company owns or leases the land and maintains electric transmission or
distribution equipment and on which ELI, pursuant to the terms of the Utility
Agreements, may locate Regeneration Facilities.
"System" means all of the Cable, the Cable Accessories, the Connecting
Points, the Regeneration Facilities, the System Electronics and other
improvements and equipment forming a part of the telecommunications network
constructed or installed pursuant to the terms of this Agreement over the Cable
Route.
"System Electronics" means all items of equipment, hardware, software,
electronics, optronics and any components thereof owned by ELI that are used to
transmit or monitor telecommunications services over the System.
"System Integrity" means the operation of a Utility Company's electric
system in a manner that is deemed to minimize the risk of injury to persons and
property and enable the Utility Company to provide adequate and reliable
electric service to its customers, as determined by the Utility Company.
"System Materials" means all Cable, Cable Accessories, System
Electronics, and other equipment and materials obtained by FOCAS or ELI under
the terms of this Agreement to construct or equip any portion of the System.
"System Segment" means a portion of the System with defined beginning
and end points.
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"Taking" means the exercise of the power of eminent domain by any
public or quasi-public authority, or any other entity having the same or similar
authority to divest title to real or personal property from a person.
"Term" means the period of time beginning on the Effective Date and
terminating on that date which is thirty (30) days after the twentieth (20th)
year anniversary of the date the entire Revenue Sharing Route is completed.
"Tower" means a tower or pole along the Cable Route: (1) erected for
electric power transmission, including all attendant equipment, structures and
power sources; or (2) used for the attachment of electrical power transmission
or distribution facilities.
"Tower Sites" means those areas on the Right of Way on which Towers are
located.
"Transferee" means any individual or entity to which either FOCAS or
ELI, pursuant to Article X, transfers or assigns any interest in this Agreement.
"Transport Services" means individual circuits used or sold as bulk
transport by ELI to other telecommunications carriers or to commercial users for
long-haul traffic on the Commercial Fibers.
"Utility Agreements" means the written agreements entered into by ELI
with the Utility Companies, or by ELI and FOCAS with any Utility Company, which
provide, among other things, for the design, engineering, construction and
installation of the System. Copies of the Utility Agreements are attached to and
incorporated by reference in this Agreement as Exhibit "F."
"Utility Companies" means Pacific Gas and Electric Company, PacifiCorp,
Southern California Edison, and any other electric power transmission company
with which ELI enters into a written agreement for use of Right of Way to
construct and install a portion of the System.
"Utility Operations" means the procurement, generation, transmission,
distribution, management or monitoring by a Utility Company of its services, or
any combination thereof, including, without limitation, consulting and advising
with respect to the use thereof and providing all related equipment and
services.
"Working Drawings" means the construction plans for the installation of
the System along the Cable Route.
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ARTICLE II
DESCRIPTION OF TRANSACTION
2.1 UTILITY AGREEMENTS. Under the terms of the Utility Agreements, the
Utility Companies and ELI have or will agree to design, engineer and install the
System along the Cable Route. ELI has entered into, or is about to enter into a
separate Utility Agreement with each of the Utility Companies relating to that
portion of the Right of Way owned or controlled by each such Utility Company.
The duties and responsibilities of the Utility Companies and ELI under the terms
of the Utility Agreements are summarized below:
(a) UTILITY COMPANIES. Under the terms of the Utility
Agreements, each Utility Company agrees to grant to ELI a Right of Way
License, or a Cable Use License.
(1) Under a Utility Agreement which grants a Right of
Way License to ELI, the applicable Utility Company: (A) grants
to ELI a license to enter upon the Right of Way controlled by
such Utility Company for the purposes of designing,
engineering, constructing and installing the System; (B)
authorizes ELI and ELI's employees, agents and contractors to
enter on such Utility Company's Right of Way, Towers and
Substation Sites to exercise ELI's rights under the terms of
its Utility Agreement with ELI; (3) allows ELI to reserve for
ELI's exclusive use an IRU in and to the Cable to be installed
on such Utility Company's Right of Way; and (4) upon
completion of the construction and installation of the System,
leases from ELI Dark Fibers in the Cable installed on such
Utility Company's Right of Way.
(2) Under a Utility Agreement which grants a Cable
Use License to ELI, the applicable Utility Company agrees to:
(A) design and install an optical fiber communications system
using the Utility Company's Right of Way along its portion of
the Cable Route; (B) upon completion of the installation of
the Cable along its portion of the Cable Route, grant to ELI
an exclusive license to use the Commercial Fibers in the Cable
installed by the Utility Company on such Utility Company's
Right of Way; and (C) reserve for the Utility Company's own
use the Dark Fibers to be installed on such Utility Company's
Right of Way.
(b) ELI. Under the terms of the Utility Agreements, ELI
makes the following undertakings:
(1) With respect to a Utility Agreement that grants
to ELI a Right of Way License, ELI agrees to: (A) design,
engineer, construct and install the System; (B) upon
completion of the construction and installation of the System
on such Utility Company's portion of the Cable Route, and
subject to ELI's reservation of an exclusive IRU to the
Commercial Fibers along such portion of the Cable Route,
transfer legal title to the Cable and the Cable Accessories
installed on the Utility Company's Right of Way to that
Utility Company; and (C) upon completion of the construction
and installation of the System on such Utility Company's
portion of the Cable Route, lease to such Utility Company the
Dark Fibers in the Cable installed on such Utility Company's
Right of Way.
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(2) With respect to a Utility Agreement that grants
to ELI a Cable Use License, ELI agrees to: (A) supply the
Cable for use in the installation of the System on the Utility
Company's portion of the Cable Route; and (B) upon completion
of the construction and installation of the System along such
portion of the Cable Route, transfer legal title to the Cable
and the Cable Accessories installed on the Utility Company's
Right of Way to that Utility Company.
2.2 DELEGATION OF CERTAIN ELI DUTIES TO FOCAS. Under the terms of the
Initial Agreement, ELI delegates to FOCAS (as contemplated by the terms of the
Utility Agreements) certain of the duties and responsibilities assumed by ELI
under the terms of the Utility Agreements. In consideration of the Quarterly
Payments made by ELI to FOCAS under the terms of the Initial Agreement with
respect to the portion of the Cable Route for which FOCAS has responsibility:
(a) FOCAS, at its expense, shall manufacture or acquire and deliver the Cable
for the System for all of the Cable Route; and (b) with respect only to those
Utility Agreements that grant a Right of Way License, FOCAS, at its expense,
either directly or indirectly through one or more approved Qualified Contractors
and in accordance with the requirements of Article V, shall perform or cause to
be performed the design, engineering and installation work for the Cable, the
Cable Accessories and the Connecting Points.
2.3 ELI DUTIES. As provided in and subject to the provisions of the
Initial Agreement, ELI, at its expense, shall design, engineer and construct the
Regeneration Facilities, and shall acquire and install all System Electronics.
2.4 LICENSES REVOCABLE. Under the terms of the Utility Agreements, the
Right of Way Licenses and the Cable Use Licenses are revocable, until such time
as each license is approved by the CPUC (as described in Section 2.5).
Consequently, until approval is obtained from the CPUC, the rights of ELI and,
hence FOCAS, under the terms of the Right of Way Licenses and the Cable Use
Licenses shall consist only of a revocable right to use and shall be subject to
all terms, covenants and conditions applicable to such licenses as contained in
the Utility Agreements.
2.5 REGULATORY APPROVAL. Each Utility Company and ELI shall jointly
apply to the CPUC under Section 851 of the California Public Utilities Code for
an Approval authorizing the Utility Company to enter into an irrevocable Right
of Way License or Cable Use License, as applicable, with ELI. FOCAS shall
cooperate fully in the application process by providing, at FOCAS's sole cost
and expense, any information, personnel or other resources a Utility Company or
ELI may reasonably request from time to time. FOCAS's cooperation shall include
assisting in the preparation of applications, discovery and testimony and making
available to the Utility Companies, ELI, the CPUC and other relevant authorities
all necessary and appropriate FOCAS information and personnel. ELI shall provide
FOCAS with a copy of all such applications made to the CPUC under the terms of
the Utility Agreements. ELI makes no representation or warranty concerning the
likelihood that any such Approval can be secured, or with respect to the nature
or extent of any conditions or limitations which may be imposed thereby, how
long the application or approval process may take, or the costs that may be
incurred in such process.
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2.6 CONVERSION FROM REVOCABLE LICENSE TO IRREVOCABLE LICENSE. If and
when a Utility Company secures a final non-reviewable Approval from the CPUC to
enter into an irrevocable Right of Way License or Cable Use License, as
applicable, with ELI for the purposes and on the terms set forth in the
applicable Utility Agreement, the revocable nature of the license described in
the applicable Utility Agreement shall automatically convert into an Irrevocable
License. Except as specifically described in the Utility Agreements, each such
Irrevocable License shall be on the same terms, covenants and conditions as the
Revocable License it replaces. ELI shall provide written notice to FOCAS of the
conversion of each Revocable License to an Irrevocable License, which notice
shall specify the effective date thereof. Thereafter, use, as applicable, of the
Cable, the Towers, the Substation Sites and the Right of Way by ELI and FOCAS
for such portion of the Cable Route shall be in accordance with the terms of the
Irrevocable License contemplated by the applicable Utility Agreement.
2.7 NONEXCLUSIVE USE OF RIGHT OF WAY. Under the terms of the Utility
Agreements, any use of a Utility Company's Towers, Substation Sites and Right of
Way granted to ELI is expressly made nonexclusive. In addition, each Utility
Company expressly reserves the right to negotiate with any third-party with
respect to the use by such third-party of such Utility Company's Towers,
Substation Sites and Right of Way, subject to the rights specifically granted to
ELI under the applicable Utility Agreement.
2.8 RESERVATION OF CERTAIN UTILITY COMPANY RIGHTS. FOCAS understands
and acknowledges that under the terms of the Utility Agreements, each Utility
Company reserves for itself, its successors and assigns, the right to use such
Utility Company's Towers, Substation Sites and Right of Way, or any portion
thereof, for any purpose such Utility Company finds necessary, together with the
right to enter upon or into such Towers, Substation Sites and Right of Way, or
any portion thereof, at all times, and for any and all purposes. Further, each
Utility Company may exercise such rights without any notice to or consent from
ELI or FOCAS and without payment of any compensation to ELI or FOCAS.
2.9 UTILITY OPERATIONS. FOCAS also understands and acknowledges that
under the terms of the Utility Agreements, if a Utility Company determines that
modifications to the Towers, the Substation Sites, or the Right of Way owned or
controlled by such Utility Company over, upon or through which the System is
installed, or any portion thereof, are necessary to conduct Utility Operations
in a manner that adversely affects the use of the System, the Utility Company
must provide ELI with twelve (12) months' prior written notice of its intention
to make such modifications. The notice must be accompanied with an alternate
route plan for the Affected Portion of the System, to the extent any such
alternate route plan can be made available. However, the foregoing right is not
available after a Revocable License converts to an Irrevocable License as
described in Section 2.6.
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2.10 NO PROPERTY OR POSSESSORY INTEREST. Neither the Revocable
Licenses, the Irrevocable Licenses, ELI's exercise of its rights under any
Utility Agreement, or FOCAS's exercise of its rights under this Agreement, shall
confer upon FOCAS any property interest in any of the Towers, the Substation
Sites, or the Right of Way, whether or not owned in fee simple by a Utility
Company or a third-party. Notwithstanding the generality of the foregoing
sentence, FOCAS, subject to the terms of the Initial Agreement, this Agreement
and the Utility Agreements that grant a Right of Way License, shall have the
right to enter upon the Towers, the Substation Sites and the Right of Way to
install the Cable and the Cable Accessories, and to construct the Connecting
Points. FOCAS shall have no such right of entry with respect to a Utility
Company's Towers, Substation Sites and Right of Way that are subject to a Cable
Use License only.
2.11 RIGHT OF ENTRY. FOCAS shall notify ELI's Project Manager and, if
requested by ELI, the applicable Utility Company whenever FOCAS intends to enter
upon the Towers, the Substation Sites and the Right of Way of a Utility Company
that has granted a Right of Way License to ELI in connection with FOCAS's
performance under this Agreement in accordance with the following notice
requirements:
(a) FOCAS shall give not less than seventy-two (72) hours
prior notice by telephone to ELI at (360) 816-4032 before entering any
Right of Way for the purpose of surveying and inspecting or making such
engineering and other tests as may be necessary or desirable for FOCAS
to complete the Working Drawings, including, without limitation,
engineering, design and installation plans and costs estimates for the
work contemplated by this Agreement.
(b) FOCAS shall give not less than one week's prior
telephone notice to ELI at (360) 816-4032 before entering any Right of
Way for the performance of any construction to be performed by FOCAS or
by others consistent with and under the terms of Section 6.10.
(c) FOCAS shall give not less than forty-eight (48) hours
prior telephone notice to ELI at (360) 816-4032 before entering any
Right of Way for the purpose of inspection, testing, Maintenance,
repair or exercise of any other right of FOCAS under this Agreement
with respect to any portion of the System not attached to the Towers.
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(d) In cases of emergency with respect to any portion of
the installed Cable, FOCAS shall provide as much prior telephone notice
as possible to ELI at (360) 816-4032.
2.12 ENTRY CONDITIONS. ELI, from time to time by written notice to
FOCAS, may specify additional entry conditions or requirements relating to a
Right of Way License arising out of the relationship of a Utility Company with a
particular land owner, including, without limitation, prior telephone notice to
the land owner, no entry unless accompanied by the applicable Utility Company's
personnel, and entry only through a specific route. FOCAS's right of entry to
the Towers, the Substation Sites and the Right of Way subject to a Right of Way
License is further subject to the conditions that: (a) FOCAS shall comply with
each Utility Company's established safety rules, copies of which are attached to
and incorporated by reference in this Agreement as Exhibit "G," when working
around the Towers, cables or other elements of the Utility Companies' electric
power transmission system; and (b) FOCAS shall indemnify ELI with respect to
such entry as further provided in Section 13.1 of this Agreement. If entry by
FOCAS is scheduled to last more than one consecutive day, a single telephone
notice describing the scope and duration of the entry shall be sufficient
notice. If such scope or duration changes, additional notice consistent with the
requirements of Section 2.11 shall be given.
2.13 COOPERATION. FOCAS shall cooperate with ELI and each Utility
Company in designing, engineering, constructing and installing the System. FOCAS
shall follow and comply with the applicable Cable Specifications and safety
rules of each Utility Company in fulfilling FOCAS's obligations under this
Agreement.
2.14 DISCLAIMER. ELI makes no representation or warranty whatsoever
(including no warranty of merchantability or fitness for a particular purpose)
concerning the nature, adequacy or suitability of the Towers, the Substation
Sites, or the Right of Way for the purposes intended by FOCAS. FOCAS
acknowledges that neither ELI nor any of ELI's officers, employees or agents has
made, nor is FOCAS entering into the Initial Agreement or this Agreement in
reliance upon, any such representation or warranty.
2.15 OPERATION OF SYSTEM. Following the Service Ready Date for each
Developed System Segment, unless expressly provided otherwise in this Agreement,
FOCAS's rights under this Agreement to such Developed System Segment shall be
limited to the receipt of Quarterly Payments derived from the Revenue Sharing
Route as described in Section 4.1 and FOCAS's other rights under Article IV. ELI
shall have full authority and responsibility with respect to the operation of
the System and the marketing, pricing and sale of Transport Service and Dark
Fiber Lease Services over the Revenue Sharing Route. ELI shall keep FOCAS
generally informed regarding ELI's marketing efforts with respect to the Revenue
Sharing Route and, without obligation, shall accept input from FOCAS regarding
the marketing of services over the Revenue Sharing Route.
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2.16 CABLE ROUTE. FOCAS and ELI estimate that the portion of the
Revenue Sharing Route for which FOCAS has responsibility under this Agreement
will extend a distance of 920 Route Miles when the System is completed. In the
event Working Drawings for the Cable Route project the total distance of the
Cable Route will exceed such estimate by more than 10 Route Miles, or fall short
of such estimate by more than 10 Route Miles, FOCAS and ELI shall meet
expeditiously to discuss and negotiate in good faith the effect of such overage
or shortfall. Among other things, FOCAS and ELI may agree to modify the
projected Cable Route, adjust the Payment Factor identified in Section 4.1, or
modify other financial considerations between them as described in this
Agreement.
ARTICLE III
TERM
3.1 TERM. The Term of this Agreement shall commence on the Effective
Date and shall continue, unless sooner terminated pursuant to the terms of this
Agreement, until midnight Pacific time on that date which is thirty (30) days
after the twentieth (20th) year anniversary of the date the entire Revenue
Sharing Route is completed. ELI shall exercise its rights to renew or extend the
term of any Utility Agreement to the extent necessary to avoid the expiration of
the term of such Utility Agreement prior to the expiration of the Term of this
Agreement. Notwithstanding the commencement of the Term on the Effective Date,
ELI's payment obligations under Section 4.1 shall not commence until the Payment
Commencement Date, and obligations of FOCAS and ELI under Articles V, VI and VII
shall not commence until the Performance Commencement Date.
3.2 TERMINATION OF AGREEMENT BY ELI. With ten (10) days' prior written
notice to FOCAS, ELI may terminate this Agreement if by the sixtieth (60th) day
following the Effective Date:
(a) ELI and FOCAS, in their reasonable discretion,
determine that the operating requirements, protocols, rules or policies
of any Independent System Operator, and the transfer of operational
control of electric transmission systems to such Independent System
Operator make it economically infeasible for: (1) ELI and FOCAS to
design or construct the System; or (2) for ELI to use the System for
the purposes contemplated by this Agreement and the Utility Agreements;
or
(b) The Detailed Restoration Plans (as defined in the
Utility Agreements) in form and content reasonably acceptable to the
Utility Companies and ELI have not been completed.
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ARTICLE IV
PAYMENTS
4.1 QUARTERLY PAYMENTS. In consideration of the interest of FOCAS and
the performance by FOCAS of its obligations specified in this Agreement, ELI
shall pay the Quarterly Payments to FOCAS according to the following
specifications:
(a) The Quarterly Payment shall be calculated by
multiplying the Gross Revenues for the applicable three month period by
the Payment Factor.
(b) The Payment Factor shall be * percent (*).
4.2 QUARTERLY PAYMENT DUE DATES. Throughout the period commencing as of
the Payment Commencement Date and throughout the balance of the Term, the
Quarterly Payments shall be due and payable within thirty (30) days after each
three month period following the Payment Commencement Date. It is understood
that the Payment Commencement Date may occur during (rather than at the end of)
a three-month period under the Initial Agreement. In such case, the Payment
Factor shall apply with respect to Gross Revenues after such date
notwithstanding that the period applicable to the first payment may be less than
three (3) full months.
4.3 SUPPORTING DOCUMENTATION. Each Quarterly Payment shall be
accompanied by a quarterly report detailing the Gross Revenues, identified into
categories of revenues, including Dark Fiber Lease Services and Transport
Services. ELI and FOCAS shall agree on a reporting format to be used prior to
the due date of ELI's first Quarterly Payment.
4.4 REIMBURSEMENT OF COSTS. On or before the twentieth (20th) working
day of each calendar month following the Performance Commencement Date, ELI and
FOCAS shall prepare and submit to each other, if applicable, an invoice for all
identified reimbursable costs pursuant to Articles III, V, VI and VII and XIII
incurred by or for the account of the invoicing party during the immediately
preceding calendar month, together with all other identified reimbursable costs
previously incurred by the invoicing party and not previously invoiced. For
purposes of this Section 4.4, "incurred" means the actual and reasonable
payments made by the invoicing party to contractors, vendors, suppliers and
other third-parties, as well as reasonable expenses booked or recorded by the
invoicing party for costs relating to its own personnel, materials and supplies
charged to such work, including actual and direct costs including fully loaded
labor costs (calculated at 1.3 times base compensation). The full amount of each
such invoice shall be due and payable by the invoiced party within thirty (30)
days following receipt thereof. If the invoiced party disputes any amount
invoiced under this Section 4.4, the amount not in dispute shall be promptly
paid and any disputed amount that is ultimately determined to have been payable
shall be paid promptly following resolution of the dispute. Any dispute that is
not resolved by mutual agreement of the parties shall be resolved in accordance
with Article XVI.
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
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4.5 PAYMENT PROCEDURE. Any fees payable to FOCAS or ELI under
this Agreement shall be made by check payable to FOCAS or ELI, as applicable,
and sent to the following addresses:
If to FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Treasurer
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: Finance Department
Either party may, at its option, and upon not less than five (5) working days
prior written notice to the other, change the place of payment described above.
4.6 LATE PAYMENT. If any payment under the terms of this Agreement is
not received by the party entitled to payment within fifteen (15) days after the
date it becomes due, the payor shall pay to the payee, in addition to the amount
due, a late fee charge in an amount equal to five percent (5%) of the amount
due. The late payment charge shall not apply to amounts not paid because of a
good faith dispute between the parties.
4.7 PERFORMANCE CRITERIA.
(a) ANNUAL REQUIREMENT. ELI shall achieve Gross Revenues
(including Gross Revenues under the Initial Agreement in the year in
which the Payment Commencement Date occurs) from the Revenue Sharing
Route in an amount equal to or greater than the applicable Performance
Criteria set forth on Exhibit "D" attached to this Agreement. The Gross
Revenues requirement shall be measured annually beginning with the
twelve (12) month period which begins thirty (30) days after the entire
Revenue Sharing Route is completed. Notwithstanding the foregoing or
any other provision of this Agreement to the contrary, in the event ELI
cannot provide telecommunications services along any material portion
of the Revenue Sharing Route for more than a continuous period of
twelve (12) hours due to a failure of the cable, an event of casualty
or a Force Majeure Event which is not adequately covered by business
interruption insurance, the Performance Criteria for the applicable
year (as shown of Exhibit "D") shall be reduced proportionately based
on a fraction, the numerator of which is the number of days (rounded up
to the nearest one-half day) the Revenue Sharing Route is
non-operational, and the denominator of which is three hundred
sixty-five (365).
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(b) PERFORMANCE AUDITS. FOCAS shall have the right to make
a performance audit within sixty (60) days of the conclusion of each
annual period. If FOCAS determines that ELI has failed to meet the
annual Performance Criteria, FOCAS shall give ELI written notice of
such failure. ELI shall have thirty (30) working days after receipt of
written notice from FOCAS in which to: (1) review the results of
FOCAS's audit; (2) provide any new information or data that might alter
FOCAS's audit conclusions; and (3) consider a resolution of any
differences of opinion concerning the results of the performance audit,
or both.
(c) RIGHTS OF FOCAS AND ELI. If at the end of such thirty
(30) working day period, FOCAS and ELI have not reached an agreement to
resolve any differences of opinion concerning the results of a
performance audit, FOCAS and ELI shall have the rights described below:
(1) ELI, at its option, may cure the Performance
Criteria shortfall by paying FOCAS the Quarterly Payments
that, in the aggregate, would be required if ELI had met the
Performance Criteria for the annual period in question.
(2) If ELI elects not to cure the Performance
Criteria shortfall, or in the event of a default by ELI as
described in Section 15.1(b)(5), this Agreement shall continue
and FOCAS, at its option and without prejudice to its rights
to Quarterly Payments (as provided in this Article IV), may
succeed to ELI's interest in the unused Commercial Fibers over
the entire Revenue Sharing Route, subject to the terms,
covenants and conditions of the Utility Agreements. If FOCAS
elects to succeed to ELI's interest in the unused Commercial
Fibers, ELI shall have the right, subject to the terms of this
Agreement, to continue its use of the Commercial Fibers then
being used by ELI to provide Transport Services and Dark Fiber
Lease Services. In addition, during the balance of the Term,
ELI shall have the right to lease unused dark fiber capacity
in the System from FOCAS on the same terms offered by FOCAS to
other carriers for similar services using comparable capacity
and for a comparable term. Such right to lease unused dark
fiber capacity is not a right of first refusal in favor of
ELI, and FOCAS may lease unused dark fiber capacity to other
telecommunications carriers or users. During any period when
ELI continues to use any portion of the Commercial Fibers (as
provided in this Section 4.7(c)(2)), ELI shall continue to
make the Quarterly Payments required in this Article IV.
(3) In the event FOCAS exercises its right to succeed
to ELI's interest in the unused Commercial Fibers as provided
above, ELI shall cooperate with FOCAS to allow co-location of
other users of the Commercial Fibers in ELI's Regeneration
Facilities, based on the availability of space. FOCAS or such
other users shall pay ELI then existing market rates for
co-location services.
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(4) Notwithstanding any other provision of this
Agreement, the rights and obligations of FOCAS and ELI
described in this Section 4.7(c) shall constitute the sole
remedy of FOCAS for a failure by ELI to satisfy the
Performance Criteria. No such failure in and of itself shall
constitute a breach of this Agreement or entitle FOCAS to
damages for breach of contract.
(d) DISPUTE RESOLUTION. Nothing in this Section 4.7 shall
prevent either FOCAS or ELI from seeking a resolution of any dispute
hereunder pursuant to the provisions of Article XVI of this Agreement.
4.8 SECURITY INTEREST.
(a) CONSENTS. ELI shall promptly determine whether any
consent of a lender or other party is required for ELI to grant to
FOCAS the security interest described in Section 4.8(b). If consent is
required, ELI shall use reasonable efforts to obtain such consent.
(b) GRANT OF SECURITY INTEREST. Subject to the
determination that consent is not required and, if consent is required,
subject to ELI obtaining all such required consents, ELI hereby grants
to FOCAS a security interest in the Gross Revenues and all accounts
arising thereunder, now or hereafter existing, and all proceeds of the
foregoing to the extent of FOCAS's interest in the Gross Revenues (as
described in this Agreement). Such security interest shall become
effective upon ELI's determination that: (1) consent, as provided above
in this Section 4.8 is not required; or (2) all required consents have
been obtained.
(c) FINANCING STATEMENTS. Following the effective date of
the grant of the security interest described in Section 4.8(b), ELI
shall execute and deliver to FOCAS any Uniform Commercial Code
Financing Statements or Continuation Statements necessary to perfect or
continue the perfection of FOCAS's security interest in the Gross
Revenues.
(d) ENFORCEMENT OF SECURITY INTEREST. FOCAS may exercise
its remedies with respect to the security interest granted in Section
4.8(b) only upon the occurrence and continuance of a default by ELI
under Section 15.1(b)(5) of this Agreement.
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ARTICLE V
SYSTEM DESIGN
5.1 FOCAS DESIGN RESPONSIBILITY. Subject to the terms of the applicable
Utility Agreement, in the event of any replacement or relocation of any material
portion of the System following the Performance Commencement Date, FOCAS, at
FOCAS's cost and expense, shall design and engineer the Cable and the Cable
Accessories to follow the portion of the Cable Route for which FOCAS has
responsibility under this Agreement and any modifications to the Towers, the
Substation Sites or the Right of Way necessary to accommodate the Cable, the
Cable Accessories and the Connecting Points. The design shall include only those
modifications to the Towers needed to accommodate installation of the Cable and
the Cable Accessories and shall not include any upgrade by any Utility Company,
unless requested by the Utility Company and paid for separately by the Utility
Company to FOCAS. Any such additional upgrade work shall not materially
interfere with or delay the design or construction of any System Segment. In
addition, the design shall include optical fiber drop-offs at each Regeneration
Facility site including the Connecting Points adjacent to the Regeneration
Facilities. FOCAS shall furnish ELI with copies of any computer models,
analyses, and design specifications developed for modifications to the Towers.
In fulfilling its responsibilities under this Section 5.1, FOCAS shall follow:
(a) the Cable Specifications; (b) the Utility Companies' established procedures
for working in and around the Towers and their electric transmission facilities,
including the applicable safety rules set forth on Exhibit "G" attached to this
Agreement; (c) the Utility Companies' design specifications relating to the Dark
Fibers and associated Connecting Points; (d) the Utility Companies' engineering
standards and specifications for the Towers; (e) ELI's design specifications
relating to the Connecting Points for optical fiber drop-offs adjacent to the
Regeneration Facilities; and (f) FOCAS's customary design and engineering
standards and specifications. FOCAS shall reimburse ELI for any design,
engineering, drawing review, or analysis that ELI performs for the System in the
place of FOCAS under the terms of this Agreement as provided in Section 4.4.
5.2 ELI DESIGN RESPONSIBILITIES. In the event of any replacement or
relocation of the System following the Performance Completion Date, ELI, at
ELI's cost and expense, shall design and engineer the Regeneration Facilities
and all System Electronics. The design shall include the extension of fiber
optic cable from the Regeneration Facilities out to the Connecting Points
adjacent to the Regeneration Facilities. ELI shall reimburse FOCAS for any
design, engineering, drawing review, or analysis that FOCAS performs for the
System in the place of ELI under the terms of this Agreement as provided in
Section 4.4.
5.3 UTILITY COMPANY INFORMATION. To facilitate FOCAS's design and
engineering responsibilities under this Agreement, ELI shall furnish to FOCAS,
to the extent available from the Utility Companies, with reasonable promptness
after request from FOCAS, and upon the condition that FOCAS shall reimburse ELI
for ELI's reasonable cost of obtaining and delivering the same:
(a) Copies of all Utility Company established procedures
for working in and around the Towers and copies of all Utility Company
transmission facilities and design specifications relating to the Dark
Fibers and associated Connecting Points.
(b) Copies of all available Maps, charts and other
engineering data and documentation pertaining to specified portions of
the Right of Way and the physical conditions thereof, including the
location and nature of all Towers, power stations, Substation Sites,
and other improvements, as well as all relevant engineering data and
plans relating thereto;
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(c) Copies of all available title documentation with
respect to specified sections of the Right of Way (including existing
easements, rights of use or other use or occupancy rights, if any,
previously granted), the Tower Sites, the Substation Sites and other
existing agreements respecting the Right of Way (including, without
limitation, utility crossings) and restrictions on the right to use and
to occupy the same for the purposes intended by this Agreement;
(d) Any available information on pending or planned
relocation projects by the Utility Companies or others along specified
sections of the Right of Way and information regarding material
scheduling restraints on obtaining temporary clearances on particular
System Segments along the Right of Way;
(e) Maps and other available documentation sufficient to
describe the identity and location of other users of specified portions
of the Right of Way, the Tower Sites, the Substation Sites and the
Towers, as well as identification of areas within the Right of Way
which might contain title or possession problems due to the nature of
the ownership, third-party right of way ownership (including, without
limitation, reversionary or reentry rights of underlying fee owners) or
third-party rights to use the Towers; and
(f) A copy of each Map of any portion of the Cable Route
each year throughout the Term, when prepared and filed with any
government agency, and a copy of any amendments or supplements to each
Map which may be prepared and so filed from time to time.
5.4 NOTICE OF ADVERSE CLAIMS. ELI shall promptly notify FOCAS in
writing of any adverse claims, actual or threatened, affecting the Right of Way,
the Towers, the Tower Sites, the Substation Sites, the Regeneration Facilities,
or the Cable Route.
5.5 WORKING DRAWINGS. When under the terms of this Agreement FOCAS has
completed the design for any System Segment, FOCAS shall either prepare, or
cause any applicable contractor to prepare, and submit to ELI Working Drawings
for the construction of that System Segment. The Working Drawings shall include
plans and specifications for the Cable, the Cable Accessories and the Connecting
Points (including Connecting Points for the Dark Fibers at locations designated
by the applicable Utility Company). Within thirty (30) working days of
submission of the Working Drawings, ELI shall approve the same in whole or in
part (which approval shall not be unreasonably withheld) or raise any objections
to the Working Drawings, which objections shall be stated in writing and in
reasonable detail and include a statement of the necessary modifications
required to obtain approval. If ELI fails to respond within such thirty (30)
working day period, ELI shall be deemed to have approved the Working Drawings.
Upon receipt of any objections to the Working Drawings, FOCAS shall use its
reasonable efforts to: (i) correct, or cause the applicable contractor to
correct, the Working Drawings with respect to which such objections were noted
by making appropriate changes thereto and to re-submit the same to ELI for
approval or objection as stated above; or (ii) dispute such objection by
referring the matter in question for determination to the Chief Engineers of
FOCAS and ELI (without thereby waiving any rights with respect to the matter in
controversy). Approval by ELI of Working Drawings submitted by FOCAS shall
constitute ELI's approval solely with respect to ELI's telecommunications system
and shall in no way be deemed to constitute an opinion of ELI with respect to
the effect of the telecommunications system on any Utility Company's electric
transmission system.
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5.6 SCHEDULING. ELI and FOCAS shall jointly develop an implementation
plan for the design and construction of any System Segments under the terms of
this Agreement. The implementation plan shall include a master schedule for all
phases of System design, engineering, placement of Regeneration Facilities,
bidding, permitting, clearances, construction, testing and required Approvals.
The implementation plan shall also sequence the work along the Cable Route in an
orderly and efficient manner that complies with the terms and requirements of
the Utility Agreements and set a Scheduled Completion Date for the System
Segment. ELI shall have primary responsibility for planning and scheduling work
associated with the Regeneration Facilities, SONET procurement, System
Electronics procurement and installation, and System turn-up. Subject to the
terms of the applicable Utility Agreement, FOCAS shall have primary planning and
scheduling responsibilities for Cable installation and splicing. The master
schedule shall be managed by ELI's Project Management Group. ELI and FOCAS shall
each designate a project management representative to coordinate efforts under
this Section 5.6. ELI shall make capital investments to provision the Commercial
Fibers with electronics, optronics, buildings, other infrastructure, and fiber
connectivity with local exchange carrier networks and interexchange carrier
networks, at a level sufficient to meet the revenue projections set forth on
Exhibit "D."
5.7 WARRANTY OF WORK. FOCAS and its Qualified Contractors, and their
subcontractors and agents who perform work to design or engineer the System
shall warrant their work in accordance with industry standards and practices and
the terms of this Agreement (including, without limitation, the Cable
Specifications). FOCAS shall, at its own cost and expense, enforce the
provisions of such warranties following completion of the work. The warranty for
the Cable shall be FOCAS's standard manufacturer's warranty which shall be a
minimum of three (3) years of operation. In addition, FOCAS shall warrant that
all design and engineering work performed by or for FOCAS (as provided in this
Article V) is consistent with industry standards and shall conform to reasonable
standards of care, skill and diligence. Such warranty shall extend for a period
of one (1) year following the Service Ready Date for the entire System. FOCAS is
not hereby warranting any design or engineering work for the System performed or
to be performed by a Utility Company. ELI's sole and exclusive remedy for a
breach of the warranty described in this Section 5.7 shall be the repair and
replacement of the warranted item or items or the correction of the warranted
work. FOCAS shall be given a reasonable time, not to exceed thirty (30) days, to
remedy the item or work in need of repair, replacement or correction. In the
event FOCAS fails to complete the repair, replacement or other correction within
such thirty (30) day period, ELI may complete the repair, replacement or other
corrective work and invoice FOCAS for the cost incurred by ELI in performing
such work as provided in Section 4.4.
- 20 -
5.8 DESIGN PERFORMANCE COMMENCEMENT. The performance obligations of
FOCAS and ELI under this Article V shall commence on the Performance
Commencement Date.
ARTICLE VI
CONSTRUCTION
6.1 SCOPE OF WORK. Subject to the terms of the applicable Utility
Agreement, in the event of any replacement or relocation of any material portion
of the System following the Performance Commencement Date, FOCAS shall be
responsible to provide and to install the Cable, the Cable Accessories, the
Connecting Points, the construction of any modifications to the Towers, the
Substation Sites or the Right of Way necessary to accommodate the Cable, the
Cable Accessories and the Connecting Points over the portion of the Cable Route
for which FOCAS has responsibility under this Agreement. The installation work
undertaken by FOCAS shall be performed by FOCAS or one or more Qualified
Contractors. ELI shall have the right to approve the appointment and
qualifications of each Qualified Contractor, which consent shall not be
unreasonably withheld or delayed. In order to permit FOCAS to perform its
construction responsibilities under this Agreement, FOCAS and the Qualified
Contractors shall have access to the Right of Way, the Towers, the Tower Sites
and the Substation Sites, subject to the notice requirements of Sections 2.11
and 2.12. Modification to the Towers shall be limited to those needed to
accommodate installation of the Cable and the Cable Accessories, and shall not
include any upgrade sought by the Utility Companies for other purposes.
6.2 REGENERATION FACILITIES. In the event of any replacement or
relocation of any material portion of the System following the Performance
Commencement Date, ELI shall be responsible for the construction of all
Regeneration Facilities and the installation of all System Electronics. The
construction and installation work shall be performed by ELI or one or more
Qualified Contractors. FOCAS shall have the right to approve the appointment and
qualifications of each Qualified Contractor, which consent shall not be
unreasonably withheld or delayed.
6.3 WORK STANDARDS. All work to be performed under this Agreement by
ELI, FOCAS and all Qualified Contractors shall be performed in a good,
workmanlike manner and in compliance with the requirements of this Agreement and
applicable electrical safety codes, prudent utility practice, and all applicable
other laws, ordinances, codes, regulations and Approvals of any government
authority having jurisdiction thereover. Work in areas adjacent to electrically
energized equipment shall be performed in accordance with the applicable Utility
Company's established safety rules set forth on Exhibit "G" attached to this
Agreement.
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6.4 TIME. Installation of the Cable, the Cable Accessories and the
Connecting Points by FOCAS under the terms of this Agreement, to the extent
practicable and within the reasonable control of FOCAS, shall be carried out by
FOCAS in accordance with the implementation plan and master schedule prepared
pursuant to Section 5.6. The implementation plan and master schedule shall be
updated and revised at regular intervals by FOCAS with the approval of ELI,
which approval shall not be unreasonably withheld or delayed. Such updating and
revision shall include, without limitation, adjustment for delays caused by a
Force Majeure Event. Unless otherwise agreed, extensions of time under such
updates and revisions shall not operate to extend the Scheduled Completion Date
or to amend the terms and requirements regarding the completion of the System
described in Section 6.13.
6.5 PERMITS AND APPROVALS. FOCAS shall use its reasonable efforts to
secure on a timely basis, at FOCAS's expense, all necessary Approvals from
government authorities having jurisdiction or approval rights with respect to
FOCAS's installation of Cable, Cable Accessories and Connecting Points under the
terms of this Agreement. The foregoing provision does not impose any requirement
on FOCAS to obtain the CPUC Approval described in Section 2.5. FOCAS shall
indemnify and save ELI harmless from any and all claims, including the expense
reasonably incurred by ELI to defend itself against such claims, resulting from
or arising out of FOCAS's failure to obtain such Approvals. ELI shall use
reasonable efforts to obtain on a timely basis all necessary Approvals from
government authorities having jurisdiction or approval rights with respect to
the construction of Regeneration Facilities and the installation of System
Electronics under the terms of this Agreement. ELI shall indemnify and save
FOCAS harmless from any and all claims, including the expense reasonably
incurred by FOCAS to defend itself against such claims, resulting from or
arising out of ELI's failure to obtain such Approvals. FOCAS and ELI shall
cooperate with each other and shall coordinate efforts with the Utility
Companies to cause their respective personnel and contractors to render all
reasonable assistance in the procurement of the Approvals.
6.6 SYSTEM MATERIALS. Subject to the terms of the applicable Utility
Agreements, FOCAS, at its expense, shall provide all System Materials necessary
to install the Cable, including the Cable Accessories and the Cable and other
System Materials required under the terms of this Agreement, up to and including
the Connecting Points. ELI, at its expense, shall provide all System Materials
necessary to construct and install the Regeneration Facilities and the System
Electronics, and other System Materials required under the terms of this
Agreement, up to the Connecting Points. All System Materials shall comply with
the Cable Specifications and shall meet the specifications described in the
Working Drawings.
6.7 INTERFACE BETWEEN FOCAS AND ELI. FOCAS and ELI shall cooperate and
mutually agree upon the respective responsibilities of each party with respect
to the interface or interconnection between the portion of the System for which
ELI has construction and installation responsibilities, and the portion of the
System for which FOCAS has construction and installation responsibilities.
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6.8 TITLE AND RISK OF LOSS.
(a) CABLE AND CABLE ACCESSORIES. At all times during the
course of construction, up until the time of the issuance of an
Acceptance of Construction with respect to any System Segment, FOCAS
shall retain title to and shall bear the risk of loss or damage with
respect to the Cable and all associated System Materials used by FOCAS
to install the Cable. Upon the issuance of an Acceptance of
Construction with respect to any System Segment, legal title to the
Cable and the Cable Accessories shall pass to the applicable Utility
Company. Notwithstanding such transfer of title to the Utility Company,
after issuance of an Acceptance of Construction, ELI shall bear the
risk of loss or damage with respect to the Cable and the Cable
Accessories.
(b) REGENERATION FACILITIES AND SYSTEM ELECTRONICS. Title
to and risk of loss associated with the Regeneration Facilities (other
than to the underlying real property) and the System Electronics shall
remain with ELI both before and after the issuance of an Acceptance of
Construction.
6.9 SYSTEM WARRANTIES. In procuring and obtaining System Materials
pursuant to Section 6.6, each of FOCAS and ELI shall use reasonable efforts to
obtain from the vendors and suppliers thereof, for the benefit of FOCAS, the
applicable Utility Company and ELI, warranties that the System Materials shall
be: (a) of the kind and quality described in the applicable Working Drawings and
the purchase orders and contracts therefor; (b) free of defects in workmanship,
material, design and title; (c) of good and merchantable quality; and (d) where
appropriate, fit for their intended purpose. FOCAS shall administer for the
benefit of FOCAS, the Utility Companies and ELI the manufacturer's and other
warranties for the Cable and its associated hardware. If requested by ELI, FOCAS
shall assign all such warranties for the Cable and its associated hardware to
ELI or the applicable Utility Company. ELI shall administer the manufacturer's
and other warranties with respect to the System Electronics both before and
after the issuance of an Acceptance of Construction associated with such System
Segment.
6.10 USE OF CONTRACTORS. FOCAS shall have the right, at its cost and
expense, to have any of the design, engineering, construction and installation
work to be provided by FOCAS under the terms of this Agreement performed by one
or more Qualified Contractors; provided that each such Qualified Contractor
retained by FOCAS to install the Cable shall be subject to the prior approval of
ELI and the applicable Utility Company. No such contract or subcontract shall
create a contractual relationship between ELI or the Utility Companies and the
Qualified Contractor, and FOCAS shall be solely responsible for the engagement
and management of the Qualified Contractors.
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6.11 INSPECTION OF CONSTRUCTION.
(a) INSPECTIONS DURING CONSTRUCTION. ELI may perform
routine inspections of any construction over which FOCAS has
responsibility while construction is in progress. A representative of
the applicable Utility Company may be on-site during all construction
work to perform functions such as safety watch, protection of its
electric transmission system, and to obtain clearances.
(b) CABLE TESTING. FOCAS shall test the Cable installed by
FOCAS in accordance with the Acceptance Testing Standards to verify
that the Cable is operating in accordance with the specifications set
forth in Exhibit "A." Testing shall progress segment by segment along
the Cable Route as Cable splicing progresses so that test results may
be reviewed in a timely manner. ELI and each applicable Utility Company
shall have the right, but not the obligation to have a representative
present to observe the testing, and FOCAS shall provide ELI prior
notice of FOCAS's testing schedule. Within five (5) working days of the
conclusion of any such testing, FOCAS shall provide ELI with a copy of
the test results. ELI shall have the right, but not the obligation, at
its sole expense, to conduct its own tests on the Cable to verify that
it is operating in accordance with the Acceptance Testing Standards set
forth on Exhibit "A," and for conformance with the applicable Working
Drawings and other construction requirements of this Agreement. ELI
shall have thirty (30) working days following receipt of FOCAS's test
results to conduct its own Cable inspections and tests.
(c) ACCEPTANCE OF CONSTRUCTION. After such thirty (30)
working day period, ELI shall furnish FOCAS with either: (i) an
Acceptance of Construction with respect to the installation of the
Cable, the Cable Accessories and the Connecting Points along such
Approved System Segment; or (ii) a statement setting forth in
reasonable detail any objections to or defects in such installation.
ELI's failure to furnish a written notification within such fifteen
(15) day working period, shall be deemed to constitute an Acceptance of
Construction for purposes of this Agreement.
(d) STATEMENT OF OBJECTIONS. Upon receipt of any such
statement of objections, FOCAS shall either: (1) correct, or cause the
applicable Qualified Contractor to correct, the objections or defects,
whereupon ELI shall re-inspect the same within fifteen (15) working
days following receipt from FOCAS that the work has been corrected, and
if found corrected, issue an Acceptance of Construction as stated
above; or (2) dispute such statement of objections or defects by
referring the disputed issues for determination to the Chief Engineers
of FOCAS and ELI (without thereby waiving any rights with respect to
the issues in controversy). Notwithstanding the foregoing, acceptance
of the construction and installation work associated with the Cable and
the Cable Accessories for any System Segment by ELI shall constitute
ELI's approval solely with respect to ELI's telecommunications system
and shall in no way be deemed to constitute an opinion of ELI with
respect to the effect of the telecommunications system on any Utility
Company's electric transmission system.
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6.12 AS-BUILT DRAWINGS. Within fifteen (15) working days following the
issuance of an Acceptance of Construction for any System Segment, constructed by
FOCAS, FOCAS, at FOCAS's cost, shall submit, or cause the applicable Qualified
Contractor to submit, to ELI "as-built" drawings of the Cable, the Cable
Accessories and the Connecting Points in paper and electronic file formats
(AutoCadd Version 13). FOCAS shall also provide to ELI, at no cost to ELI, Cable
splicing and splice data records for ELI's fiber database records. Within
fifteen (15) working days following the delivery of the "as-built" drawings, ELI
shall inspect the Cable, the Cable Accessories and the Connecting Points along
such Developed System Segment for conformance with the "as-built" drawings.
Within fifteen (15) working days following such inspection, ELI shall furnish
FOCAS with either: (a) an acceptance of the drawings with respect to the Cable,
the Cable Accessories and the Connecting Points; or (b) a statement setting
forth in reasonable detail any reasonable objections to or defects in the
drawings thereof. Failure of ELI to issue written notification to FOCAS within
such fifteen (15) working day period shall be deemed to constitute acceptance of
such drawings by ELI for purposes of this Agreement. Upon receipt of any such
statement of reasonable objections or defects, FOCAS shall either: (i) promptly
amend, or cause the applicable Qualified Contractor to amend, the "as-built"
drawings, if so requested by ELI; (ii) correct the defects, or cause the
applicable Qualified Contractor to correct the defects, whereupon ELI shall
re-inspect the same within fifteen (15) working days following notice from FOCAS
that the work has been corrected and, if found corrected, issue an acceptance of
the drawings as provided above; or (iii) dispute such statement of objections or
defects by referring the disputed issues for determination, without thereby
waiving any rights with respect to the issues in controversy, to the Chief
Engineers of FOCAS and ELI. Notwithstanding the foregoing, ELI's approval of any
"as-built" drawings or statement of any objections to such "as-built" drawings
shall signify approval of or objections with respect to ELI's telecommunications
system along such Developed System Segment only and shall in no way be deemed to
represent an opinion of ELI with respect to the effect of the telecommunications
system on any Utility Company's electric transmission system.
6.13 COMPLETION OF SYSTEM CONSTRUCTION. FOCAS shall diligently seek to
complete the installation of all Cable, Cable Accessories and Connecting Points
over which FOCAS has construction responsibility under the terms of this
Agreement by the Scheduled Completion Date. If the Service Ready Date has not
occurred by the ninetieth (90th) day following the Scheduled Completion Date and
Section 14.1 does not apply, ELI, at its option, may notify FOCAS in writing
that ELI or ELI's designee will assume all or part of the project construction
administration, and FOCAS shall work with ELI to transfer to ELI that part of
the construction project administration as may be requested by ELI. If ELI
participates in such construction, FOCAS shall promptly reimburse ELI the direct
and actual costs incurred by ELI in such participation as described in Section
4.4. ELI shall provide reasonable supporting documentation for its costs.
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6.14 WARRANTY OF WORK. Each of FOCAS and ELI shall cause their
respective contractors, subcontractors and agents who perform work to install
the System under the terms of this Agreement (including, without limitation each
Qualified Contractor) to warrant their work in accordance with industry
standards and practices and the terms of this Agreement (including, without
limitation, the Cable Specifications). FOCAS or ELI, as applicable, shall, at
its own cost and expense, enforce the provisions of such warranties following
completion of the work. A copy of FOCAS's manufacturer's warranty for the Cable
is attached to and incorporated by reference in this Agreement as Exhibit "H."
In addition, FOCAS shall warrant that all installation work (as provided in this
Article VI) is consistent with industry standards and shall conform to
reasonable standards of care, skill and diligence. Such warranty shall extend
for a period of one (1) year following the Service Ready Date for the entire
System. ELI's sole and exclusive remedy for a breach of the warranty described
in this Section 6.14 shall be the repair and replacement of the warranted item
or items or the correction of the warranted work. FOCAS is not hereby warranting
any installation work for the System performed or to be performed by a Utility
Company. FOCAS shall be given a reasonable time, not to exceed thirty (30) days,
to remedy the item or work in need of repair, replacement or correction. In the
event FOCAS fails to complete the repair, replacement or other correction within
such thirty (30) day period, ELI may complete the repair, replacement or other
corrective work and invoice FOCAS for the cost incurred by ELI in performing
such work as provided in Section 4.4.
6.15 CONSTRUCTION PERFORMANCE COMMENCEMENT. The performance obligations
of FOCAS and ELI under this Article VI shall commence on the Performance
Commencement Date.
ARTICLE VII
PROPERTY RIGHTS, OBLIGATIONS AND MAINTENANCE
7.1 AVOIDANCE OF ENCUMBRANCES. FOCAS shall not create or permit any
lien or other encumbrance against the Right of Way, the Towers, the Substation
Sites, the Cable, the Cable Accessories, the Connecting Points, the Regeneration
Facilities, the System Electronics, the Commercial Fibers, any IRU (or
comparable lease or other right), or the Gross Revenues. ELI shall not create or
permit any lien or other encumbrance against the Right of Way, the Towers, the
Substation Sites, or create or permit any lien or other encumbrance not existing
as of the Effective Date affecting ELI's right, title or interest in and to the
Cable, the Cable Accessories, the Connecting Points, the Regeneration
Facilities, the System Electronics, the Commercial Fibers, any IRU (or
comparable lease or other right) or the Gross Revenues. Such covenant by ELI
shall not affect ELI's right to market over the System, or to sell, lease,
assign or swap rights in and to the Commercial Fibers as provided in Section
10.1(b). The foregoing covenant shall not be breached by the creation of
mechanic's, materialman's, or similar liens in the ordinary course of
construction or installation, provided that such liens are satisfied, bonded, or
otherwise provided for in due course by the party hereto which is responsible
for the creation or imposition of such liens.
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7.2 PAYMENT OF AD VALOREM TAXES. ELI or the applicable Utility Company
shall pay any Ad Valorem Taxes assessed against the System during the Term.
FOCAS shall not be required to pay any such Ad Valorem Taxes.
7.3 SALES OR USE TAXES.
(a) FOCAS. FOCAS shall pay or cause to be paid all sales
and use taxes associated with or attributable to FOCAS's provision and
installation of the Cable, the Cable Accessories and the Connecting
Points. FOCAS shall indemnify and hold ELI harmless from and against
all sales and use taxes associated with or attributable to the
provision and installation of the Cable, the Cable Accessories and the
Connecting Points.
(b) ELI. ELI shall pay or cause to be paid all sales and
use taxes associated with or attributable to ELI's provision and
installation of the Regeneration Facilities and the System Electronics.
ELI shall indemnify and hold FOCAS harmless from and against all sales
and use taxes associated with or attributable to the provision and
installation of the Regeneration Facilities and the System Electronics.
7.4 LIENS.
(a) RELEASE OF LIENS. In the event the System or any
portion thereof becomes subject to any mechanics', artisans' or
materialmen's lien, the following provisions shall apply:
(1) If such a lien is chargeable to or through FOCAS,
FOCAS shall promptly cause the same to be discharged and
released of record (by payment, posting of bond, court deposit
or other means) without cost to ELI or the applicable Utility
Company. FOCAS shall indemnify ELI against all costs and
expenses (including reasonable attorney fees) reasonably
incurred in discharging and releasing such lien. If any such
lien is not so discharged and released within ninety (90) days
after notice thereof by ELI to FOCAS, then ELI may pay or
secure the release or discharge thereof at the expense of
FOCAS.
(2) If such a lien is chargeable to or through ELI,
ELI shall promptly cause the same to be discharged and
released of record (by payment, posting of bond, court deposit
or other means) without cost to FOCAS. ELI shall indemnify
FOCAS against all costs and expenses (including reasonable
attorney fees) reasonably incurred in discharging and
releasing such lien. If any such lien is not so discharged and
released within ninety (90) days after notice thereof by FOCAS
to ELI, then FOCAS may pay or secure the release or discharge
thereof at the expense of ELI.
- 27 -
(b) CONTEST OF LIENS. Nothing in this Agreement shall
preclude FOCAS or ELI from contesting any lien described in Section
7.4(a) above or the contract or action upon which the same arose after
the same shall have been bonded or otherwise released of record, as
provided above.
(c) FACILITIES AS COLLATERAL. Neither FOCAS nor ELI shall
create or permit a pledge or encumbrance of any of its interests in the
System which in any manner impairs or could impair the use and
operation of the System for internal or commercial telecommunications
purposes.
7.5 DISCONTINUANCE OR RELOCATION. Each Utility Company shall be
entitled to discontinue its use of or to relocate any part of its electric
transmission system, including the Towers, or to discontinue use of any portion
of the Right of Way or the Substation Sites. However, as provided in the Utility
Agreements, a Utility Company may not take any action to release or relinquish
voluntarily its underlying property interests along the Right of Way, whether by
a Taking or otherwise, without first notifying ELI. In the event of any such
discontinuance or relocation, during or after construction of any System
Segment, ELI shall give written notice to FOCAS as soon as reasonably
practicable. The notice of discontinuance or relocation shall be accompanied by
a plan of any alternative route, if available.
7.6 RELOCATION OF CABLE. In the event the Cable or the Cable Route
requires relocation or replacement, the cost of such relocation or replacement
shall be allocated as provided in the Utility Agreements; provided, however, if
FOCAS requests the relocation, FOCAS shall pay all of ELI's and the applicable
Utility Company's relocation costs. If the relocation is required other than by
ELI, FOCAS or a Utility Company, the relocation costs allocable to and paid by
ELI as provided under the terms of the applicable Utility Agreement shall be
deducted from Gross Revenues for the applicable accounting period when
calculating the Quarterly Payment.
7.7 DESIGN AND INSTALLATION OF RELOCATED FACILITIES. In the event of
the relocation of any portion of the System after the Service Ready Date for the
Affected Portion, FOCAS shall have the same design and installation
responsibilities for the relocated Cable, Cable Accessories and Connecting
Points as described in Articles V and VI. In the event of any such relocation,
FOCAS shall be compensated for such materials and for such design and
installation services in accordance with the cost allocations described in
Section 7.6 in a reasonable amount which is consistent with then prevailing
market rates, terms and conditions.
7.8 UTILITY COMPANY MAINTENANCE RESPONSIBILITIES. Under the terms of
the Utility Agreements, each Utility Company is responsible for the Maintenance
of the Cable, the Cable Accessories, the Connecting Points, the Towers, the
Substation Sites and the Right of Way along its portion of the Cable Route. ELI
is required, under the terms of the Utility Agreements, to reimburse the Utility
Companies for such Maintenance costs. All such Maintenance costs allocable to
and paid by ELI under the terms of the Utility Agreements, net of casualty
insurance and other recoveries by ELI, shall be a deduction from the Gross
Revenues obtained by ELI from the use of the System for the purpose of
calculating the Quarterly Payments.
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7.9 MAINTENANCE OF REGENERATION FACILITIES AND SYSTEM ELECTRONICS. ELI,
at ELI's sole cost, shall be responsible for the Maintenance of the Regeneration
Facilities and the System Electronics.
7.10 RESTORATION PLANS. ELI shall not agree to the terms of the
detailed restoration plan contemplated by each Utility Agreement, without the
prior written consent of FOCAS, which consent shall not be unreasonably withheld
or delayed.
7.11 PERFORMANCE COMMENCEMENT. The performance obligations of FOCAS and
ELI under this Article VII shall commence on the Performance Commencement Date.
ARTICLE VIII
REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF ELI. ELI represents
and warrants to FOCAS, and covenants with FOCAS, as follows:
(a) AUTHORITY. ELI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to enter
into this Agreement and to perform according to the terms, covenants
and conditions contained in this Agreement.
(b) RESTRICTIONS. The execution and performance of this
Agreement, any instrument or document required by this Agreement, and
the consummation of the transactions contemplated by this Agreement
will not violate any article, bylaw or other corporate restriction, or
to the best of ELI's knowledge, any statute, ordinance, law, order,
ruling, certificate or license, regulation or demand of any court,
regulatory agency or other tribunal to which ELI is subject.
(c) BINDING OBLIGATION. This Agreement, when duly executed
by ELI, shall constitute a valid, legal and binding obligation of ELI,
and shall be enforceable in accordance with its terms, subject to the
effect of any bankruptcy, insolvency, reorganization, liquidation,
moratorium, receivership, conservatorship, readjustment of debts, or
other similar laws affecting the rights of creditors generally.
(d) GOVERNMENT APPROVALS. ELI has all necessary government
approvals to enter into and to perform its obligations under this
Agreement, excepting approvals, if any, required from local government
authorities regarding ELI's use of the System located within the
jurisdiction of any such government authority, which approvals ELI
shall use reasonable efforts to obtain.
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(e) PROCEEDINGS. Except for matters now pending or that
may hereafter be brought by or before the CPUC or other regulatory
bodies having jurisdiction over ELI and the activities contemplated by
this Agreement relating to the provision of telecommunications
services, no litigation or government proceeding is pending, or to
ELI's knowledge, threatened which might adversely affect this
Agreement, the transactions contemplated by this Agreement, or ELI's
rights under, or ability to perform pursuant to the terms of, this
Agreement. ELI shall promptly notify FOCAS of any material adverse
claims, actual or threatened, affecting any part of the System or ELI's
telecommunications business in the State of California.
(f) CONDUCT OF BUSINESS. ELI will operate the System in a
safe manner and will use reasonable efforts to comply in all material
respects with applicable laws, regulations and government orders. ELI
shall use reasonable efforts, consistent with reasonable commercial
practices, to maximize Gross Revenues generated from the Revenue
Sharing Route.
(g) COMPLIANCE WITH GOVERNMENT REQUIREMENTS. ELI has not
violated any rule, order or regulation issued by any government
authority with respect to ELI, its business or operations which may
materially and adversely affect ELI's ability to execute and perform
its obligations under this Agreement.
(h) FINANCING RESTRICTIONS. This Agreement does not
violate any terms, covenants, conditions or restrictions in any
mortgages, bonds and other indentures of ELI.
(i) RESOURCES AND CAPACITY. ELI possesses sufficient
financial, managerial, and technical capacity and resources to perform
its obligations under the terms of this Agreement.
(j) RELATIONSHIP WITH CONTRACTORS. ELI shall timely
perform all of its duties and obligations to ELI's contractors and
subcontractors, including, without limitation, the payment of sums
owing to such contractors and subcontractors, who perform work or
supply materials to complete ELI's design, engineering, construction
and installation obligations under this Agreement.
(k) ENFORCEMENT OF UTILITY AGREEMENTS. ELI covenants that
it shall use its best efforts to enforce the provisions of the Utility
Agreements including but not limited to the provisions of Sections 2.6,
9.9 and 9.10(a)(2) of the Utility Agreement with Pacific Gas and
Electric Company dated effective as of December 31, 1997 to the end
that the Utility Company shall pay to ELI, and ELI in turn shall pay to
FOCAS from the funds paid by the Utility Company to ELI net of ELI's
cost of enforcement, FOCAS's costs (based on a rate of $* per
Route Mile) arising from any revocation, relocation, or discontinuance
to the fullest extent of the provisions of such Utility Agreements.
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
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(l) CONSENTS OF UTILITY COMPANIES. ELI shall use its best
efforts to obtain the consent of each Utility Company to the succession
by FOCAS to ELI's interest in the unused Commercial Fibers subject to
the Utility Agreement with such Utility Company (on the terms described
in Section 4.7 of this Agreement) either: (1) in the provisions of the
Utility Agreement; or (2) by a separate acknowledgment from the Utility
Company promptly following the effective date of such Utility
Agreement.
8.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF FOCAS. FOCAS
represents and warrants to ELI, and covenants with ELI, as follows:
(a) AUTHORITY. FOCAS is corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to enter
into this Agreement and to perform according to the terms, covenants
and conditions contained in this Agreement.
(b) RESTRICTIONS. The execution and performance of this
Agreement, any instrument or document required by this Agreement, and
the consummation of the transactions contemplated by this Agreement
will not violate any article, bylaw or other corporate restriction, or
to the best of FOCAS's knowledge, any statute, ordinance, law, order,
ruling, certificate or license, regulation or demand of any court,
regulatory agency or other tribunal to which FOCAS is subject.
(c) BINDING OBLIGATION. This Agreement, when duly executed
by FOCAS, shall constitute a valid, legal and binding obligation of
FOCAS, and shall be enforceable in accordance with its terms, subject
to the effect of any bankruptcy, insolvency, reorganization,
liquidation, moratorium, receivership, conservatorship, readjustment of
debts, or other similar laws affecting the rights of creditors
generally.
(d) GOVERNMENT APPROVALS. FOCAS has or will use reasonable
efforts to procure all necessary government approvals to enter into and
to perform its obligations under this Agreement.
(e) PROCEEDINGS. Except for matters now pending or that
may hereafter be brought by or before the CPUC or other regulatory
bodies having jurisdiction over the activities contemplated by this
Agreement relating to the provisions of telecommunications services, no
litigation or governmental proceeding, including, without limitation,
before the CPUC, is pending, or to FOCAS's knowledge, threatened which
might adversely affect this Agreement, the transactions contemplated by
this Agreement, or FOCAS's rights under, or ability to perform pursuant
to the terms of, this Agreement. FOCAS shall promptly notify ELI of any
material adverse claims, actual or threatened, affecting any portion of
the System.
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(f) CONDUCT OF BUSINESS. In performing its obligations
under this Agreement, FOCAS will use reasonable efforts to comply in
all material respects with all applicable laws, regulations and
government orders.
(g) COMPLIANCE WITH GOVERNMENT REQUIREMENTS. To its
knowledge, FOCAS has not violated any rule, order or regulation issued
by any government authority with respect to FOCAS, its business or
operations which may materially and adversely affect FOCAS's ability to
execute and perform its obligations under this Agreement.
(h) FINANCING RESTRICTIONS. This Agreement does not
violate any terms, covenants, conditions or restrictions in any
mortgages, bonds and other indentures of FOCAS.
(i) RESOURCES AND CAPACITY. FOCAS possesses sufficient
financial, managerial, and technical capacity and resources to perform
its obligations under the terms of this Agreement.
(j) RELATIONSHIP WITH CONTRACTORS. FOCAS shall timely
perform all of its duties and obligations to FOCAS's contractors and
subcontractors, including, without limitation, the payment of sums
owing to such contractors and subcontractors, who perform work or
supply materials to complete FOCAS's design, engineering, construction
and installation obligations under this Agreement.
8.3 CONFIDENTIALITY. For purposes of this Section 8.3, the term
"Information" shall mean all information furnished by FOCAS and ELI to each
other, or by or to their respective representatives, including drafts and the
final form of this Agreement, whether or not reduced to writing or specifically
identified as intellectual property, non-public, confidential, or proprietary,
and all analyses, compilations, data, studies, or other documents prepared by
FOCAS or ELI containing, or based in whole or in part on, any such furnished
information, or reflecting review of, or interest in, all or part of such
information. As used in this Agreement, a "representative" of FOCAS or ELI, as
the case may be, shall mean any and all directors, officers, employees, agents
or representatives, including, without limitation, contractors, subcontractors,
attorneys, accountants, consultants and financial advisors of FOCAS or ELI, as
the case may be. In consideration of being furnished with the Information, FOCAS
and ELI agree that:
(a) NONDISCLOSURE. The Information will be kept
confidential and will not, without the prior written consent of the
party providing the information, be disclosed by the other party or any
of its representatives, in any manner whatsoever, in whole or in part,
and will not be used by a party or any of its representatives directly
or indirectly for any purpose other than activities contemplated by
this Agreement. Moreover, FOCAS and ELI will transmit the Information
only to those representatives who need to know the Information for the
purpose of performing or exercising each party's obligations and rights
under this Agreement.
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(b) AUTHORIZED DISCLOSURE. Without the prior written
consent of the other party, neither party or its representatives will
disclose to any other person the fact that the Information has been
made available, or any of the terms, conditions or other facts with
respect to this Agreement, except as required by law and then only with
prior written notice given, as soon as possible, to the other party and
in compliance with the provisions of Section 17.4. The term "person" as
used in this Agreement shall be interpreted broadly to include, without
limitation, any corporation, company, group, partnership or individual.
(c) NONCONFIDENTIAL INFORMATION. This Section 8.3 shall be
inoperative as to any portion of the Information which: (1) is or
becomes generally available to the public other than as a result of a
disclosure by a party or its representatives; (2) becomes available to
a party in good faith from a third-party not subject to a confidential
obligation to the party; or (3) was known to a party on a
nonconfidential basis prior to its disclosure by the other party or one
of its representatives.
(d) COMPELLED DISCLOSURE. In the event that either party
or anyone to whom the party transmits the Information relating to this
Agreement is requested or becomes legally compelled (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand, or any similar process) to disclose any of the
Information, the party so compelled will provide prompt written notice
of such event to the other party so that the notified party may seek a
protective order or other appropriate remedy, waive compliance with the
provisions of this Agreement or both. In the event that such protective
order or other remedy is not obtained or that the notified party waives
compliance with the provisions of this Agreement, the legally compelled
party will furnish only that portion of the Information which is
legally required and will exercise reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded the
Information.
(e) PUBLIC RECORDS LAW. It is understood that FOCAS and
ELI are or may in the future be subject to public records disclosure
laws, and that these laws will govern the disclosure responsibilities
of FOCAS and ELI notwithstanding the terms of this Agreement. To the
extent reasonably practical, FOCAS and ELI will notify each other of
any public records requests of any part of the Information, and will
give the other party a reasonable opportunity to contest the public
records request.
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(f) NON-WAIVER. The failure or delay by a party in
exercising any rights, power or privilege under this Section 8.3 shall
not operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise of any right,
power or privilege hereunder.
(g) PUBLIC COMMUNICATIONS. All press releases and other
public communications of any sort relating to this Agreement or the
transactions described herein shall be subject to the prior approval of
the applicable Utility Company and both FOCAS and ELI, which approval
by FOCAS or ELI shall not be unreasonably withheld or delayed. Excluded
from the foregoing are disclosures required by securities laws and
rules or regulations of securities exchanges applicable to the parties
or their publicly-held Affiliates.
(h) EQUITABLE RELIEF. FOCAS and ELI shall be entitled to
equitable relief, including injunctive relief and specific performance,
in the event of any breach of the confidentiality provisions of this
Agreement. Such remedies shall not be deemed to be the exclusive
remedies for a breach of this Agreement by FOCAS, ELI or their
respective representatives, but shall be in addition to all other
remedies available by law or equity. A breach of the provisions of this
Section 8.3 may subject that party who has provided Information to
irreparable harm and injury.
(i) OWNERSHIP OF INFORMATION. The Information acquired
from the other party or any of its representatives shall be and shall
remain the exclusive property of the disclosing party. Neither the
disclosure of Information, or the execution of this Agreement shall be
construed as a license to the party receiving Information to make use
of, or sell the Information or products derived from the Information,
or to make use of it in any way that damages or competitively
disadvantages the party disclosing the Information.
8.4 COOPERATION. FOCAS and ELI shall cooperate with each other, in good
faith, and shall use reasonable efforts to:
(a) SYSTEM DESIGN AND DEPLOYMENT. Expeditiously complete
the design and installation of the System as provided in this
Agreement;
(b) CONFLICTS RESOLUTION. Negotiate reasonable and
mutually beneficial resolutions to all conflicts that may arise between
FOCAS and ELI relating to the design, installation, Maintenance,
operation and use of the System or any other duty, right or obligation
of either of them relating to or arising out of this Agreement;
(c) APPROVALS AND CONSENTS. Obtain all regulatory,
government, third-party and shareholder approvals, consents, permits
and franchises as may be necessary or prudent for the operation of the
System as described in this Agreement; and
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(d) COORDINATION AND COOPERATION WITH UTILITY COMPANIES.
Coordinate efforts under this Agreement with ELI's obligations under
the Utility Agreements, and to cooperate with the Utility Companies to
design, engineer, construct and install the System in accordance with
the requirements of and pursuant to the terms of the Utility
Agreements, including, without limitation, the Cable Specifications and
each Utility Company's safety rules.
8.5 REGULATORY COMPLIANCE. FOCAS and ELI shall each be responsible to
comply with the regulatory requirements relating to its own business practices
and operations.
8.6 CERTIFICATES. Upon request of either FOCAS or ELI, at any time and
from time to time, the other party without charge and within thirty (30) days
following receipt of such request, shall certify in writing to the requesting
party: (a) that this Agreement is in full force and effect and has not been
supplemented, modified or amended (or if there have been supplements,
modifications or amendments, specifying same); (b) whether, to the best
knowledge of the party issuing such certificate, any sums are then due and
payable by ELI to FOCAS or by FOCAS to ELI pursuant to any provisions of this
Agreement (and if such sums remain unpaid, the amount thereof); (c) whether, to
the best knowledge of the party issuing such certificate, the other party is in
default in the performance of any term, covenant or condition of this Agreement
(or, if defaults exist, specifying each particular in which it is asserted such
other party is in default); (d) if such certificate is issued in connection with
any financing of any portion of the System, the requesting party is authorized
to enter into the financing transaction and that the other party will adhere to
and perform its obligations under Article X, following its receipt of notice of
the transfer; and (e) as to other matters as the party requesting such
certificate may reasonably request.
8.7 INDEPENDENT STATUS. FOCAS and ELI reserve no control whatsoever
over the employment, discharge, compensation of or services rendered by the
employees or contractors of each other, notwithstanding the ability of FOCAS and
ELI to exercise certain rights to enforce the various standards and
specifications agreed upon pursuant to this Agreement. Nothing in this Agreement
shall be construed as inconsistent with the foregoing independent status and
relationship or as creating or implying a partnership or joint venture between
FOCAS and ELI.
8.8 TRANSACTIONS WITH AFFILIATES. All transactions with an Affiliate
involving the System entered into by either FOCAS or ELI shall be at
arm's-length, for market prices and shall comply with any applicable regulatory
requirements.
8.9 FURTHER ASSURANCES. FOCAS and ELI, with reasonable promptness,
shall each execute and deliver such further instruments, documents, applications
and requests or petitions for authority as may be necessary or prudent to
implement or carry out more effectively the terms, covenants and conditions of
this Agreement.
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8.10 AUDIT RIGHTS. FOCAS shall have the right to audit ELI's books and
records relating solely to the Quarterly Payments and the satisfaction of the
Performance Criteria, including, without limitation, the Gross Revenues derived
from the operation of the Revenue Sharing Route, and ELI's costs for which ELI,
under the terms of Section 4.4 of this Agreement, seeks reimbursement or
contribution from FOCAS. Any such audit shall be conducted: (a) by a reputable
public accountant or, as applicable, a member of the internal auditing staff of
FOCAS or ELI; and (b) during reasonable business hours in such manner as not to
interfere with the normal business activities of the party being audited.
8.11 INTERFERENCE. Whenever a Utility Company notifies FOCAS or ELI
that the System or any portion thereof materially interferes with the operation
of such Utility Company's equipment or with existing equipment of current
licensees, or constitutes a hazard to the service rendered by the Utility
Company or other licensee, or fails to comply with the codes or regulations
herein before referred to, FOCAS and ELI shall cooperate with each other and use
reasonable efforts to cooperate with and assist the Utility Company to remedy
the interference or hazard. Under no circumstances shall either ELI, FOCAS, or
their respective employees or Qualified Contractors disturb, tamper with or
contact any Utility Company equipment, without the Utility Company's consent.
ELI and FOCAS shall each avoid contact with Utility Company's lines, wires and
transformers, whether or not they appear to be energized.
8.12 INDEPENDENT SYSTEM OPERATOR. ELI shall provide FOCAS with a copy
of the organizational documents, protocols and operating policies of the
Independent System Operator relevant to FOCAS's obligations under this Agreement
and not protected by confidentiality covenants when available to ELI.
8.13 PERFORMANCE IN STEAD. Should either party (the "Non-performing
Party") fail to make any payment or to do any act as provided in this Agreement,
then the other party (the "Other Party"), at the Other Party's option, without
any obligation to do so, and without releasing the Non-performing Party from any
obligation under this Agreement may: (a) make or do the same in such manner and
to such extent the Other Party may deem necessary to protect the Other Party's
rights under this Agreement or any of the Utility Agreements; (b) commence,
appear in and defend any action or proceeding purporting to affect the Other
Party's rights or interests under this Agreement or to the System; (c) pay,
purchase, contest or compromise any encumbrance, charge or lien which, in the
sole judgment of the Other Party, affects or may affect the Other Party's rights
or interests under this Agreement or to the System; and (d) in exercising any
such powers, incur any liability, expend such reasonable amounts as the Other
Party, in its sole discretion, may deem necessary.
8.14 UTILITY AGREEMENTS. No amendments shall be made to any of the
Utility Agreements which affect FOCAS without FOCAS's prior written consent,
which consent shall not be unreasonably withheld or delayed.
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ARTICLE IX
INSURANCE
9.1 REQUIRED INSURANCE COVERAGE. Without limiting any of the
liabilities or other obligations of FOCAS or ELI, both parties shall procure and
cause their respective contractors, including, without limitation, Qualified
Contractors, to procure and maintain in force at their own cost and expense the
following insurance coverages during any period of construction and throughout
the Term, as applicable:
(a) WORKERS COMPENSATION AND EMPLOYERS LIABILITY
INSURANCE. Workers Compensation Insurance to cover obligations imposed
by applicable federal and state statutes and Employers Liability
Insurance with a minimum limit of $1,000,000.00 for injury or death for
each accident.
(b) COMMERCIAL LIABILITY INSURANCE. Commercial Liability
Insurance with a minimum combined single limit of $10,000,000.00 each
occurrence. The policy shall include coverage for bodily injury
liability, property damage liability, personal injury liability,
products liability, completed operations liability, and contractual
liability for liability assumed under this Agreement. The policy shall
contain a severability of interest provision.
(c) AUTOMOBILE LIABILITY INSURANCE. Automobile Liability
Insurance with a minimum combined single limit of $3,000,000.00 for
each accident for bodily injury and property damage, to include
coverage for all owned, non-owned and hired vehicles.
(d) PROFESSIONAL LIABILITY INSURANCE. Professional
Liability Insurance for engineering activities performed by each party
under the terms of this Agreement. The limit of coverage shall not be
less than $1,000,000.00 for each claim.
9.2 GENERAL CONDITIONS. The following general conditions apply to the
extent FOCAS or ELI do not self-insure:
(a) FOCAS POLICIES. The policies required to be maintained
by FOCAS and its contractors pursuant to Sections 9.1(b), (c) and (d)
shall: (1) include ELI as an additional insured; (2) provide that ELI
shall not by reason of its inclusion as an additional insured, incur
liability to the insurer for payment of premiums for such insurance;
and (3) provide that such insurance is primary and not excess without
right of contribution from any other insurance which might be otherwise
available to ELI.
(b) ELI POLICIES. The policies required to be maintained
by ELI and its contractors pursuant to Sections 9.1(b), (c) and (d)
shall: (1) include FOCAS as an additional insured; (2) provide that
FOCAS shall not by reason of its inclusion as an additional insured,
incur liability to the insurer for payment of premiums for such
insurance; and (3) provide that such insurance is primary and not
excess without right of contribution from any other insurance which
might be otherwise available to FOCAS.
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9.3 EVIDENCE OF INSURANCE. Prior to commencing work under the terms of
this Agreement, FOCAS, ELI and their respective contractors shall furnish a
certificate of insurance as evidence attesting that the insurance required under
this Article IX is in effect. Each policy of insurance required hereunder shall
state that coverage shall not be cancelled except after thirty (30) days' prior
written notice to the other party. The certificate of insurance must be signed
by a person authorized by that insurer to bind coverage on its behalf and shall
be submitted:
If to FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Jack Bottoms
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: Finance Department
Either party may inspect original policies or require complete certified copies
at any time. Upon request, each of FOCAS and ELI shall furnish the other with
the same evidence of insurance for its contractors and subcontractors as
required by this Article IX.
9.4 BLANKET POLICIES. Nothing in this Article IX shall be construed to
prevent either FOCAS or ELI from satisfying its insurance obligations pursuant
to this Agreement under a blanket policy or policies of insurance which meet or
exceed the requirements of this Article IX.
9.5 SELF-INSURANCE. Notwithstanding any provision in this Article IX to
the contrary, FOCAS may self-insure and ELI, through its parent Citizens
Utilities Company, may self-insure all or any portion of the insurance required
under this Agreement.
ARTICLE X
ASSIGNMENT AND OTHER TRANSFERS
10.1 TRANSFERS. This Agreement and the rights granted under this
Agreement are being granted in reliance on the financial standing and technical
experience of FOCAS and ELI and are thus granted personally to ELI by FOCAS and
to FOCAS by ELI. Neither FOCAS nor ELI may assign any right under this
Agreement, whether in whole or in part, without the prior written consent of the
other, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the generality of the foregoing:
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(a) Either party may assign its rights in this Agreement
in whole or in part without the consent of the other party to an
Affiliate, provided that such assignment shall not relieve the
assigning party of any of its obligations under this Agreement; and
(b) ELI, without prior notice to or the prior consent of
FOCAS, shall have the right to sell, lease, assign or swap rights in
and to the Commercial Fibers to commercial users of telecommunications
services and to other telecommunications services providers in the
ordinary course of business. All such transactions shall be subject to
the terms of this Agreement, and no such transaction shall relieve ELI
of its obligations under this Agreement.
10.2 FINANCING. In the event that ELI or FOCAS, after obtaining the
consent of the other party pursuant to Section 10.1, assigns its interest under
this Agreement pursuant to a sale-leaseback or other financing transaction, the
non-transferring party agrees that, upon written notice to it specifying: (a)
the name and address of the Transferee; and (b) the name and address of the
Transferee's agent who is entitled to receive notice on behalf of the
Transferee, the non-transferring party will simultaneously give to such agent
any notices required to be given to the transferring party under this Agreement.
The non-transferring party shall accept payment or performance by the
Transferee's agent of any obligation of the transferring party provided such
payment or performance shall be made within the applicable cure periods allowed
by this Agreement. The Transferee's agent shall have the right to cure any
default by the transferring party within the applicable cure periods allowed by
this Agreement. Subject to the terms of Section 10.1 and this Section 10.2, the
Transferee may further assign or transfer any rights or interests it may have
under this Agreement from time to time, in whole or in part, with the prior
written consent of the non-transferring party, which consent shall not be
unreasonably withheld or delayed.
10.3 RECOGNITION OF TRANSFEREES. ELI and FOCAS shall recognize each
other's authorized Transferees as provided this Article X, so long as all of the
obligations of the transferring party under this Agreement are being performed
and such Transferee agrees to be bound by and to observe and perform the
obligations of the transferring party under this Agreement.
10.4 NO ASSUMPTION OR RELEASE. Except as set forth in Section 10.3, no
assignment under this Article X shall be deemed to be an assumption by the
Transferee of the obligations of the transferring party under this Agreement.
The transferring party shall not in any event be released, relieved or
discharged of or from any of the obligations assumed under this Agreement unless
specifically agreed to by the non-transferring party.
10.5 MERGERS AND ACQUISITIONS. Notwithstanding any provision of this
Agreement to the contrary, neither FOCAS nor ELI shall be restricted or
prohibited by this Agreement from participating in or completing any mergers
with or acquisitions of businesses similar to or comparable in nature with the
business in which they are now engaged, provided that the successor by merger to
either FOCAS or ELI shall be subject to the terms, covenants and conditions of
this Agreement and shall be deemed to have assumed all obligations of the
merging party hereunder.
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ARTICLE XI
CONDEMNATION
11.1 TAKING. Should any portion of the Towers, the Substation Sites or
the Right of Way owned or controlled by a Utility Company be the subject of a
Taking, the Revocable License or the Irrevocable License, as then applicable,
granted to ELI under the terms of the applicable Utility Agreement, to the
extent appropriated by such Taking, shall terminate. In the event of a Taking,
the Cable Route shall be relocated as provided in Sections 7.5, 7.6 and 7.7.
11.2 NOTICE OF TAKING. ELI shall promptly notify FOCAS of any Taking
threatened or filed against any portion of the Towers, the Substation Sites or
the Right of Way. Under the terms of the Utility Agreements, the applicable
Utility Company, to the extent reasonably available, is required to procure
alternate Right of Way within which the System may be relocated following such
Taking. FOCAS shall cooperate with ELI and the applicable Utility Company to
relocate any portion of the System affected by a taking, whether before or after
the completion of the installation of the Cable.
ARTICLE XII
ENVIRONMENTAL HAZARD LIABILITY
12.1 RESPONSIBILITIES OF FOCAS. If any Hazardous Substance is
unlawfully introduced or released by FOCAS or any of its contractors or
subcontractors which affects any portion of the System, FOCAS shall defend,
indemnify and hold ELI and the applicable Utility Company harmless from and
against any and all expenses, claims, fines and actions arising out of the
existence, introduction or release of any such Hazardous Substance, including,
without limitation, attorney fees and costs. In addition, FOCAS shall also bear
all costs of removing, neutralizing, containing or otherwise remediating any
such Hazardous Substance.
12.2 RESPONSIBILITIES OF ELI. If any Hazardous Substance is unlawfully
introduced or released by ELI or any of its contractors or subcontractors which
affects any portion of the System, ELI shall defend, indemnify and hold FOCAS
and the applicable Utility Company harmless from and against any and all
expenses, claims, fines and actions arising out of the existence, introduction
or release of any such Hazardous Substance, including, without limitation,
attorney fees and costs. In addition, ELI shall also bear all costs of removing,
neutralizing, containing or otherwise remediating any such Hazardous Substance.
12.3 WARNING. The California Health and Safety Code requires businesses
to provide warnings prior to exposing individuals to material listed by the
Governor of California as chemicals "known to the State of California to cause
cancer, birth defects or reproductive harm." The Utility Companies use or may
use chemicals on the Governor's list at many of their facilities and locations.
Accordingly, in exercising its rights and performing the work or services
contemplated by this Agreement, FOCAS and its contractors and subcontractors and
their respective employees and agents may be exposed to chemicals on the
Governor's list. FOCAS shall be responsible for notifying all such persons that
work performed hereunder may result in exposures to chemicals on the Governor's
list.
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ARTICLE XIII
LIABILITY AND INDEMNITY
13.1 FOCAS INDEMNITY. FOCAS shall indemnify, defend and hold harmless
ELI, its parent corporation, officers, agents and employees (the "ELI
Indemnitees") of and from any claim, demand, lawsuit, or action of any kind for
injury to or death of persons, including, but not limited to, employees of FOCAS
or ELI, and damage or destruction of property, including, but not limited to,
property of FOCAS, any Utility Company or ELI, or other loss or damage incurred
by ELI, arising out of: (a) negligent acts or omissions or willful misconduct of
FOCAS, its agents, officers, directors, employees or contractors; or (b) the
breach by FOCAS of any of its obligations under this Agreement. The obligation
to indemnify shall extend to and encompass all costs incurred by ELI and any ELI
Indemnitee in defending such claims, demands, lawsuits or actions, including,
but not limited to, attorney, witness and expert witness fees, and any other
litigation related expenses. FOCAS's obligations pursuant to this Section 13.1
shall not extend to claims, demands, lawsuits or actions for liability to the
extent attributable to the negligence or willful misconduct of ELI, the ELI
Indemnitees, or their respective contractors, successors or assigns, or to the
acts of third-parties. FOCAS shall pay any cost that may be incurred by ELI or
the ELI Indemnitees in enforcing this indemnity, including reasonable attorney
fees.
13.2 ELI INDEMNITY. ELI shall indemnify, defend and hold harmless
FOCAS, its officers, agents and employees (the "FOCAS Indemnitees") of and from
any claim, demand, lawsuit, or action of any kind for injury to or death of
persons, including, but not limited to, employees of FOCAS or ELI, and damage or
destruction of property, including, but not limited to, property of either FOCAS
or ELI, or other loss or damage incurred by FOCAS, arising out of: (a) negligent
acts or omissions or willful misconduct of ELI, its agents, officers, directors,
employees or contractors; or (b) the breach by ELI of any of its obligations
under this Agreement. The obligation to indemnify shall extend to and encompass
all costs incurred by FOCAS and any FOCAS Indemnitee in defending such claims,
demands, lawsuits or actions, including, but not limited to, attorney, witness
and expert witness fees, and any other litigation related expenses. ELI's
obligations pursuant to this Section 13.2 shall not extend to claims, demands,
lawsuits or actions for liability to the extent attributable to the negligence
or willful misconduct of FOCAS, the FOCAS Indemnitees, or their respective
contractors, successors or assigns, or the acts of third-parties. ELI shall pay
any cost that may be incurred by FOCAS or the FOCAS Indemnitees in enforcing
this indemnity, including reasonable attorney fees.
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13.3 NO CONSEQUENTIAL DAMAGES. NOTWITHSTANDING ANY PROVISION IN THIS
AGREEMENT TO THE CONTRARY, NEITHER FOCAS NOR ELI SHALL BE LIABLE TO THE OTHER
FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR INDIRECT DAMAGES, INCLUDING
WITHOUT LIMITATION, LOSS OF USE, LOSS OF PROFITS, COST OF CAPITAL OR INCREASED
OPERATING COSTS, ARISING OUT OF THIS TRANSACTION WHETHER BY REASON OF CONTRACT,
INDEMNITY, STRICT LIABILITY, NEGLIGENCE, INTENTIONAL CONDUCT, BREACH OF WARRANTY
OR FROM BREACH OF THIS AGREEMENT. The foregoing provision shall not prohibit
FOCAS or ELI from seeking and obtaining general contract damages for a breach of
this Agreement, including, without limitation, the payment or application of any
monetary obligation described in Article IV.
13.4 DEFENSE OF CLAIMS. Either FOCAS or ELI as the indemnifying party
hereunder shall have the right to defend the other by counsel of the
indemnifying party's selection reasonably satisfactory to the indemnified party,
with respect to any claims within the indemnification obligations of this
Article XIII. FOCAS and ELI shall give each other prompt notice of any asserted
claims or actions indemnified against, shall cooperate with each other in the
defense of any such claims or actions, and shall not settle any such claims or
actions without the prior written consent of the other.
13.5 THIRD-PARTY CLAIMS. Except as set forth in Sections 10.2, 13.1 and
13.2, nothing in this Agreement shall be construed to create rights in, or
duties or liabilities to, or any standard of care with reference to, or to grant
remedies to, any person or entity not a party to this Agreement. FOCAS and ELI
by entering into this Agreement do not hold themselves out as furnishing like or
similar services to any other person or entity.
13.6 SURVIVAL. The obligations of the respective parties under this
Article XIII shall survive the expiration or earlier termination of this
Agreement.
13.7 APPLICABILITY OF LIABILITY LIMITATIONS. The waivers and
disclaimers of liability, releases from liability, exclusive remedy provisions,
and (except as expressly stated to the contrary therein) indemnity and hold
harmless provisions expressed throughout this Agreement shall: (a) apply even in
the event of the fault, negligence (in whole or in part), strict liability, or
breach of contract of the party released or whose liability is waived,
disclaimed, limited, apportioned or fixed by such exclusive remedy provision, or
who is indemnified or held harmless; and (b) extend to the Affiliates, parent
corporations, directors, officers, employees and agents of both FOCAS and ELI.
Such provisions shall continue in full force and effect notwithstanding the
completion, termination, suspension, cancellation or rescission of this
Agreement, or termination of the rights and privileges granted by this
Agreement. No parent corporation, officer, director, employee, agent or other
individual representative of either FOCAS or ELI shall be personally responsible
for any liability arising under this Agreement.
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13.8 CLAIMS AGAINST THIRD-PARTIES. Nothing contained herein shall
operate as a limitation on the right of either FOCAS or ELI to bring an action
for damages against any third-party, including indirect, special or
consequential damages, based on any acts or omissions of such third-party as
such acts or omissions may affect the construction, operation or use of the
Commercial Fibers, the Dark Fibers or the System. FOCAS and ELI shall reasonably
cooperate with each other, including, without limitation, executing documents
and doing whatever else may be reasonably appropriate to enable the other to
pursue any such action against such third-party. Each of FOCAS and ELI shall
assign such rights of claims, execute such documents and to whatever else may be
reasonably necessary to enable the other to pursue any such action against such
third-party. The provisions of this Section 13.8, however, shall not permit
either FOCAS or ELI to bring an action for damages against a third-party for
indirect, special or consequential damages if such third-party, directly or
through one or more intermediate parties, pursuant to this Agreement, has a
right of indemnification, impleader, cross claim, contribution, or other right
of recovery against FOCAS or ELI.
13.9 ANTI-INDEMNITY STATUTE. FOCAS and ELI are aware of the provisions
of Section 2782 of the California Civil Code. FOCAS and ELI have negotiated and
agreed to the provisions of this Agreement that address the apportionment of
risk, such as the warranty, insurance and liability provisions of this
Agreement. For adequate consideration both FOCAS and ELI have concluded this
Agreement with the intent that the apportionment of risk in this Agreement be
valid and binding under such code section and the laws of California in general.
ARTICLE XIV
FORCE MAJEURE
14.1 EXCUSE OF PERFORMANCE. Notwithstanding anything in this Agreement
to the contrary, neither FOCAS nor ELI shall be liable or responsible for a
delay or failure in performing or carrying out any of its obligations (other
than its obligations to make payments under Article IV) under this Agreement
caused by a Force Majeure Event (as defined below).
14.2 DEFINITION. The term "Force Majeure Event" as used in this
Agreement shall mean any cause beyond the reasonable control of FOCAS or ELI, as
applicable, or beyond the reasonable control of any of their respective
contractors, subcontractors, suppliers or vendors, including without limitation:
(a) ACTS OF GOD. Acts of God, including, but not
necessarily limited to, lightning, earthquakes, adverse weather of
greater duration or intensity than normally expected for the job area
and time of year, fires, explosions, floods, other natural
catastrophes, sabotage, acts of a public enemy, wars, blockades,
embargoes, insurrections, riots or civil disturbances;
- 43 -
(b) LABOR DISPUTES. Labor disputes, including, but not
necessarily limited to, strikes, work slowdowns, work stoppages or
labor disruptions, labor or material shortages, or delays or
disruptions of transportation;
(c) COURT ORDERS. Orders and judgments of any federal,
state or local court, administrative agency or government body
materially and adversely affecting use of the Revenue Sharing Route;
(d) GOVERNMENT OR REGULATORY AGENCIES. Orders or judgments
of any government or regulatory agency materially and adversely
affecting use of the Revenue Sharing Route.
(e) INDEPENDENT SYSTEM OPERATOR. Actions of any
Independent System Operator having operational control over any Utility
Company's electric transmission system which materially and adversely
affects the use of the System;
(f) CHANGE IN LAW. The adoption of or change in any
federal, state or local laws, rules, regulations, ordinances, permits
or licenses, or changes in the interpretation of such laws, rules,
regulations, ordinances, permits or licenses, by a court or public
agency having appropriate jurisdiction after the date of the execution
of this Agreement which make performance hereunder unlawful,
impossible, or economically infeasible or which frustrates the purpose
and intent of this Agreement; or
(g) GOVERNMENT APPROVALS. Any suspension, termination,
interruption, denial or failure to issue or renew by any government
authority or other party having approval rights of any Approval
required or necessary hereunder for the construction, installation or
operation of the System or for either party to perform its obligations
hereunder, except when such suspension, termination, interruption,
denial or failure to issue or renew results from the negligent act or
failure to act of the party claiming the occurrence of a Force Majeure
Event.
14.3 CONTINUANCE AFTER FORCE MAJEURE EVENT. If either FOCAS or ELI
cannot fulfill any of its obligations under this Agreement by reason of a Force
Majeure Event, such party shall promptly notify the other and shall exercise due
diligence to remove such inability with all reasonable dispatch; provided, that
nothing contained in this Section 14.3 shall be construed as requiring FOCAS or
ELI to settle any strike, work stoppage or other labor dispute in which it may
be involved, or to accept any permit, certificate, license or other Approval on
terms deemed unacceptable to such party, or to enter into any contract or other
undertaking on terms which the party deems to be unduly burdensome or costly.
- 44 -
ARTICLE XV
DEFAULT AND TERMINATION
15.1 TERMINATION EVENTS. The occurrence and continuance of the
following events may result in the termination of this Agreement, subject to the
provisions of this Article XV:
(a) CHANGE OF CONDITIONS. A change of conditions under
which FOCAS, ELI or any portion of the Revenue Sharing Route operates
which is beyond the control of the parties such that the Revenue
Sharing Route, or any material portion thereof, cannot continue to
operate as contemplated by the terms of this Agreement, including,
without limitation:
(1) A change in the financial condition of FOCAS or
ELI that materially and adversely affects the ability of FOCAS
or ELI to perform in accordance with the terms, covenants and
conditions of this Agreement;
(2) The occurrence of an event of casualty which
results in the physical destruction of ten percent (10%) or
more of the Revenue Sharing Route;
(3) Changes in law or in the regulatory environment
that materially and adversely affect the use of any portion of
the Revenue Sharing Route;
(4) Actions by an Independent System Operator that
materially and adversely affect the use of any portion of the
Revenue Sharing Route;
(5) The occurrence of a Force Majeure Event that
renders FOCAS or ELI unable to perform its material
obligations under this Agreement for a continuous period of
six (6) months;
(6) The inability of a Utility Company or ELI to
obtain any required material Approvals for the use and
occupation of the Right of Way and the Towers by the System;
(7) The inability of a Utility Company or FOCAS to
obtain any required material Approvals for the installation of
the Cable, the Cable Accessories and the Connecting Points; or
(8) The termination of any Utility Agreement other
than due to a default by ELI thereunder.
- 45 -
(b) DEFAULT. A material default under the terms, covenants
or conditions of the Initial Agreement by FOCAS or ELI, or a material
default under the terms, covenants or conditions of this Agreement by
either FOCAS or ELI, including, without limitation:
(1) The failure of either FOCAS or ELI to make any
payment required under the terms of this Agreement when due;
(2) Either FOCAS or ELI announces to the other its
intention to terminate this Agreement for strategic or other
reasons that are unrelated to the parties' performance under
this Agreement;
(3) The willful failure by either FOCAS or ELI to
perform its obligations under the terms of this Agreement;
(4) Either FOCAS or ELI, by willful acts or
omissions, places either itself or the Revenue Sharing Route
or any portion thereof in a position or condition which
violates the terms, covenants and conditions of this Agreement
or effectively terminates this Agreement, including, without
limitation, a willful failure to cure a default after having
received written notice thereof from the other party; or
(5) Either FOCAS or ELI becomes insolvent, is
dissolved or liquidated, files or has filed against it a
petition in bankruptcy, reorganization, dissolution or
liquidation or similar action (which in the case of an
involuntary filing against a party is not stayed or dismissed
within ninety (90) days after the filing thereof), or is
adjudicated a bankrupt, or has a receiver appointed for its
assets.
15.2 ACTIONS FOLLOWING OCCURRENCE OF TERMINATION EVENT. Should any
termination event described in Section 15.1 occur, FOCAS and ELI shall have the
following rights and obligations:
(a) CHANGE OF CONDITIONS. If the termination event is a
change in conditions described in Section 15.1(a), FOCAS and ELI shall
meet expeditiously to discuss and negotiate in good faith the effect of
the changed condition on this Agreement, their respective performance
obligations hereunder, and their ability to perform under the terms,
covenants and conditions of this Agreement. By mutual consent, FOCAS
and ELI may terminate this Agreement, or modify this Agreement to
address and account for the changed condition in a mutually acceptable
manner. If FOCAS and ELI cannot agree on a solution to the effect of
the changed condition, either party, by written notice to the other,
may elect to terminate this Agreement; provided that nothing herein
shall abrogate, reduce, alter, or adversely affect the right of either
FOCAS or ELI to receive, or their respective obligations to make, the
payments required by Article IV.
- 46 -
(b) DEFAULT. If the termination event is a default
described in Section 15.1(b), the nondefaulting party shall give
written notice of such occurrence to the defaulting party. The
defaulting party shall be given a reasonable time to cure any breach or
default as follows:
(1) In the case of a monetary default, the defaulting
party shall have thirty (30) days after receipt of the written
notice in which to effectuate a cure.
(2) In the case of a nonmonetary default, the
defaulting party shall have sixty (60) days after receipt of
the written notice in which to effectuate a cure. If the
nonmonetary default cannot be corrected within such sixty (60)
day period, the defaulting party shall have an additional
reasonable time in which to effectuate a cure, provided the
defaulting party commences corrective action within the
original sixty (60) day period and thereafter diligently
prosecutes the corrective action to completion. If the
defaulting party does not timely cure the breach or default
within the time periods specified above, the nondefaulting
party may elect to terminate this Agreement by providing
written notice of such election to the defaulting party.
(c) REMEDIES. In the event of an uncured breach or default
described in Section 15.1(b), the nondefaulting party shall have
available to it all legal remedies available at law or in equity for
breach of contract, including, without limitation, general contract
damages.
15.3 NO RELEASE. No termination or expiration of this Agreement or the
rights granted hereunder shall release either FOCAS or ELI, as applicable, from
any liability or obligation (whether for the Quarterly Payment or other payments
described in Article IV, payments of indemnity or otherwise) which may have
become due, attached or accrued prior to, or which become due, attach or accrue
at the time or by reason of, such termination or expiration.
ARTICLE XVI
DISPUTE RESOLUTION
16.1 DISPUTE RESOLUTION. Except as may otherwise be set forth
expressly herein, all disputes arising under this Agreement shall be resolved as
set forth in this Article XVI.
16.2 NEGOTIATION AND MEDIATION. FOCAS and ELI shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiations between a Vice President of FOCAS or his or her
designated representative and an executive of similar authority of ELI. Either
FOCAS or ELI may give the other party written notice of any dispute. Within
twenty (20) days after delivery of such notice, the designated executives shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary to exchange information and to attempt to resolve the
dispute. If the matter has not been resolved within thirty (30) days of the
first meeting, either FOCAS or ELI may initiate a mediation of the controversy.
The mediation shall be facilitated by a mediator that is acceptable to both
parties and shall conclude within sixty (60) days of its commencement, unless
FOCAS and ELI agree to extend the mediation process beyond such deadline. Upon
agreeing on a mediator, FOCAS and ELI shall enter into a written agreement for
the mediation services. The mediation shall be conducted in accordance with the
Commercial Mediation Rules of the American Arbitration Association.
- 47 -
16.3 CONFIDENTIALITY. All negotiations and any mediation conducted
pursuant to Section 16.2 shall be confidential and shall be treated as
compromise and settlement negotiations, to which Section 1152.5 of the
California Evidence Code shall apply, which Section is incorporated in this
Agreement by reference.
16.4 INJUNCTIVE RELIEF. Notwithstanding the foregoing provisions,
either FOCAS or ELI may seek a preliminary injunction, other provisional
judicial remedy, or other equitable remedies if in its judgment such action is
necessary to avoid irreparable damage or to preserve the status quo.
16.5 CONTINUING OBLIGATION. FOCAS and ELI shall continue to perform
their obligations under this Agreement pending final resolution of any dispute
arising out of or relating to this Agreement.
16.6 FAILURE OF MEDIATION. If FOCAS and ELI, after good faith efforts
to mediate a dispute under the terms of this Agreement (as provided in Section
16.2), cannot agree to a resolution of the dispute either party may pursue
whatever legal remedies may be available to such party, at law or in equity,
before a court of competent jurisdiction and with venue as provided in Section
17.7.
ARTICLE XVII
MISCELLANEOUS
17.1 AMENDMENTS. Neither this Agreement nor any provisions hereof may
be changed, waived, discharged or terminated orally and may only be modified or
amended by an instrument in writing, signed by both FOCAS and ELI.
17.2 BINDING EFFECT. This Agreement shall be binding upon FOCAS, ELI
and their respective successors and assigns. This Agreement shall inure to the
benefit of FOCAS, ELI and, to the extent provided in Article X, their respective
successors and assigns.
17.3 WAIVERS. The failure by FOCAS or ELI at any time or times
hereafter to require strict performance by the other of any of the undertakings,
agreements or covenants contained in this Agreement shall not waive, affect or
diminish any right of FOCAS or ELI under this Agreement to demand strict
compliance and performance therewith. None of the undertakings, agreements or
covenants of FOCAS and ELI under this Agreement shall be deemed to have been
waived unless such waiver is evidenced by an instrument in writing signed by the
party to be charged specifying such waiver.
- 48 -
17.4 NOTICES. Unless otherwise specifically provided in this Agreement,
any notice or other communication herein required or permitted to be given shall
be in writing and may be personally served, telecopied, or sent by courier or
United States certified mail and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of a telecopy, or five
(5) days after deposit in the United States mail, with postage prepaid and
properly addressed, as follows:
If to FOCAS, to: FOCAS, Inc.
1685 Bluegrass Lakes Parkway
Alpharetta, Georgia 30201
Attn: Jack Bottoms
Telephone: (770) 664-4949
Facsimile: (770) 664-4379
With copy to: Cookson America, Inc.
1 Cookson Place
Providence, Rhode Island 02903
Attn: James V. Rosati
Telephone: (401) 521-1000
Facsimile: (401) 521-5273
If to ELI, to: Electric Lightwave, Inc.
8100 N.E. Parkway Drive, #200
Vancouver, Washington 98662
Attn: Legal Department
Telephone: (360) 892-1000
Facsimile: (360) 816-3821
Such addresses may be changed by notice to the other party given in the same
manner as above provided.
17.5 SEVERABILITY. If any term or provision of this Agreement shall, to
any extent, be determined by a court of competent jurisdiction to be void,
voidable or unenforceable, such void, voidable or unenforceable term or
provision shall not affect any other term or provision of this Agreement.
17.6 INTERPRETATION. Whenever the context shall require, the plural
shall include the singular, the whole shall include any part thereof, and any
gender shall include both other genders. The article, section and subsection
headings contained in this Agreement are for purposes of reference only and
shall not limit, expand or otherwise affect the construction of any provisions
hereof. All references in this Agreement to articles, sections and subsections,
unless expressly noted otherwise, are to articles, sections and subsections
contained in this Agreement. Unless the context requires otherwise, references
in this Agreement to "party" shall be to either FOCAS or ELI, as applicable, and
references to "parties" shall be to both FOCAS and ELI.
- 49 -
17.7 GOVERNING LAW AND CHOICE OF FORUM. This Agreement and all matters
relating hereto shall be governed by, construed and interpreted in accordance
with the laws of the State of California. Any mediation under this agreement
shall be held in the State of California, County of San Francisco. Jurisdiction
for any disputes arising out of this Agreement shall be exclusively in the
courts of the State of California, state or federal, and any litigation shall be
brought in San Francisco County, California.
17.8 COMMISSIONS. FOCAS and ELI shall indemnify and hold each other
harmless (including attorney fees and costs) from and against any and all claims
for brokerage and finder's fees or commissions which may be asserted against the
other based on the actions or omissions of the indemnifying party. FOCAS and ELI
shall each pay any fees or compensation due to their respective consultants as
advisors, if any, with respect to this transaction.
17.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered, shall be deemed an
original, but all such counterparts taken together shall constitute only one
instrument.
17.10 ATTORNEY FEES. FOCAS and ELI agree that should either of them
default in any of the covenants or agreements contained herein, the defaulting
party shall pay all costs and expenses, including reasonable attorney fees and
costs, incurred by the nondefaulting party to protect its rights hereunder,
regardless of whether an action is commenced or prosecuted to judgment.
17.11 COSTS. Except as otherwise set forth in this Agreement, FOCAS and
ELI shall each be responsible for its own costs, including legal fees, incurred
in negotiating and finalizing this Agreement.
17.12 NO THIRD-PARTY BENEFICIARIES. Except as otherwise expressly
provided in this Agreement, the terms, covenants and conditions of this
Agreement, shall not be construed as being for the benefit of any person who is
not a signatory to this Agreement.
17.13 ENTIRE AGREEMENT. This Agreement expresses the entire
understanding of FOCAS and ELI relating to the subject matter hereof. All prior
understandings, written or oral, with respect to such subject matter are hereby
merged herein and superseded.
- 50 -
17.14 SURVIVAL. In addition to the survival provisions set forth
elsewhere in this Agreement, those Articles or Sections of this Agreement which
by their nature should survive expiration or other termination of the Agreement,
include Section 5.7 (Warranty of Work), Section 6.14 (Warranty of Work), Section
8.3 (Confidentiality), Article XIII (Liability and Indemnity), Section 15.2
(Actions Following Occurrence of Termination Event), and Section 15.3 (No
Release).
17.15 EXHIBITS. The exhibits to this Agreement referenced above are an
integral part of the agreement and understanding of the parties and are
incorporated in this Agreement by reference. Any exhibits referred to above in
this Agreement which are not attached hereto as of the Effective Date may be
attached to this Agreement following the Effective Date when approved as to form
by both FOCAS and ELI. The omission of any of the exhibits from this Agreement
as of the Effective Date shall not affect the enforceability of this Agreement.
DATED effective as of the date first above written.
FOCAS:
FOCAS, INC., a Delaware corporation
By: /s/ James Rosati
Title: Chairman
ELI:
ELECTRIC LIGHTWAVE, INC., a Delaware corporation
By: /s/ Daryl A. Ferguson
Title: Chief Executive Officer
G:\5093\194\POST0505.AGR
- 51 -
EXHIBIT "A"
ACCEPTANCE TESTING STANDARDS
----------------------------
FOCAS shall meet or exceed the Acceptance Testing Standards set forth below.
ELI Network Span and Final Acceptance Requirements:
1.0 Design Criteria:
The number of cable splices at the time of original construction must be
designed to an average of 4 km between splices. Due to cable cuts, and cable
relocation, additional splices are allowed. The number of splices must be
closely monitored to insure attenuation and reflection tolerances are
maintained. FOCAS will endeavor to keep the number of splices in a span to a
minimum.
Construction:
Cable must be constructed in accordance with sound commercial practices. The
National Electrical Code shall be followed in every case except where local
regulations are more stringent, in which case local regulations shall govern.
2.0 Typical Fiber Cable Information:
Single mode fiber specifications may vary, depending on the fiber manufacturer.
Typical levels of 0.40 dB per Km @ 1310nm and 0.30 per Km @ 1550nm are expected.
3.0 Span Requirements:
Span documentation must be performed using the two following methods: OTDR
(optical time domain reflectometer) and insertion loss (stabilized light source
and power meter) measurement in each direction at 1550nm wavelength.
o Maximum total span loss must not exceed 35.0 dB at 1550nm for a
100 Km span.
o Maximum dB/Km loss must not exceed 0.30 dB/Km at 1550nm excluding
splices
o In no case shall a fiber show a point discontinuity greater than
0.1dB. Discontinuities (known as steps, or attenuation
non-uniformities) shall be measured with an optical time domain
reflectometer (OTDR) to determine the loss of the localized
attenuation. The lease squares fit method of measurement must be
used to determine the magnitude of the loss of a point
discontinuity.
o Span loss will be the sum of cable loss in dB/Km plus System
splice loss in dB. The test results will be submitted to ELI in a
format approved by ELI.
o Maximum span dispersion = 2250 ps/mn/Km for a 100 Km span. o
Performance levels at the time of acceptance must be maintained
at all times. o Test data including OTDR hard copies or
electronic data must be submitted to Common System Engineering
before Final Acceptance. ELI, at its discretion, may choose to
physically monitor any or all testing associated with Final
Acceptance of the Commercial Fibers.
In the event the measured span measured values exceeds the calculated values,
FOCAS will perform corrective maintenance as required to restore the Commercial
Fibers to the calculated values.
4.0 Splice Loss:
The splice loss will average 0.10dB @ 1550 nm. All splicing will be performed by
FOCAS. Further, no individual splice will exceed 0.30dB. Splices shall be
measured using bi-directional methods to average absolute splice loss. All fiber
splicing must be fusion type. The test results will be submitted to ELI in a
format approved by ELI.
5.0 Compliance:
ELI, at its discretion, may choose to physically monitor any or all testing
associated with acceptance of the Commercial Fibers. Test data including OTDR
hard copies or electronic data must be submitted to ELI for review. Traces will
be taken on each fiber after all work is completed, bi-directionally, at 1310 nm
and 1550 nm, and submitted on 3 1/2 inch floppy disks. Filenames will be
approved by the Project Engineer prior to traces being submitted. ELI has the
option to waive any specifications and/or requirements listed in the technical
specification criteria.
6.0 Waivers:
FOCAS must provide Cable with attenuation of not greater than 0.30 dB/Km @
1550nm and will not be required to perform corrective maintenance under 0.30dB
to reduce span attenuation.
7.0 Key Optical Performance Characteristics Required for Single-Mode Optical
Cables:
A2
7.1 Attenuation Single Mode Non-Shifted:
o The attenuation must not exceed 0.30 dB/Km when measured at a
wavelength of 1.55 microns (1550nm) using the two point
measurement. o The attenuation must not exceed 0.40 dB/Km when
measured at a wavelength of 1.30 microns (1310nm) using the two
point measurement.
7.2 Attenuation Single Mode Dispersion Shifted:
o The attenuation must not exceed 0.30 dB/Km when measured at a
wavelength of 1.55 microns (1550nm) using the two point
measurement.
7.3 Attenuation versus Wavelength Single-Mode and Dispersion Shifted:
o The attenuation for the wavelength region form 1525 nm to 1575 nm
must not exceed the attenuation at 1550 nm by more than 0.05
dB/Km.
7.4 Chromatic Dispersion Non-Dispersion Shifted (ps/nm-km):
o For conventional single mode fibers, the zero dispersion
wavelength must be 1300 to 1322.5nm. The maximum dispersion slope
(SoMAX) must be no greater than 0.092ps/(km-nm squared). The
nominal zero dispersion wavelength must be near 1310nm zero
dispersion range. The dispersion between 1530 and 1570 nm must be
less than or equal to 18 ps/(nm km).
7.5 Cutoff Wavelength:
o The cutoff wavelength of cabled fiber must be less than 1260 nm.
7.6 Core Diameter:
o The core diameter must be typically 8.30 plus or minus 0.13.
7.7 Temperature:
o Cable operating temperature range -40(degree) C to +85(degree) C.
FOCAS will insure that the Cable and related appurtenances meet all of the above
optical performance characteristics operating systems power level.
A3
EXHIBIT "B"
CABLE ROUTE
-----------
An approximate description of the Cable Route is set out below:
Utility Company Route Description
PacifiCorp *
PG&E *
Southern California *
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
EXHIBIT "C"
CABLE SPECIFICATIONS
--------------------
SINGLE-MODE OPTICAL FIBER
GENERAL
The fiber is optimized for use in the 1310 nm wavelength region. The
information-carrying capacity of the fiber is at its highest in this
transmission window; it is also where dispersion is the lowest. The fiber can
also be effectively used in the 1550 nm wavelength region.
The fiber coating is optimized for use in many single and multi-fiber cable
designs including loose tube, ribbon, slotted core and tight buffer cables. The
fiber coating shall provide fiber protection and must be easy to work with. The
fiber coating must be capable of mechanical stripping with an outside diameter
of at least 245 (mu)m.
The fiber is manufactured using the Outside Vapor Deposition (OVD) process,
which produces a totally synthetic, ultra-pure fiber. As a result, the fiber has
consistent geometric properties, high strength and low attenuation. The Vapor
Axiel Deposition (VAD) process may also be used.
GENERAL FEATURES AND BENEFITS
o Versatility in 1310 nm and 1550 nm applications.
o Geometrical properties that allow for low splice loss and high splice
yields.
o OVD and VAD manufacturing reliability and product consistency.
o Optimized for use in ribbon, loose tube and other common cable designs.
OPTICAL SPECIFICATIONS
Attenuation
- ------------------------------------------------
Uncabled Fiber Attenuation Cells Point Discontinuity
- ------------------------------------------------
- ------------------------- ----------------------
Attenuation Cells No point of discontinuity greater than 0.10 dB at either 1310 nm
(dB/km) or 1550 nm.
- ------------------------- ----------------------
- ------------------------- ----------------------
Wavelength (nm) Standard
- ------------------------- ----------------------
- ------------------------- ----------------------
Less than or equal to
1310 0.40 Attenuation at the Water Peak
- ------------------------- ----------------------
- ------------------------- ----------------------
Less than or equal to
1550 0.30 The attenuation at 1383 plus or minus 3 nm shall not exceed 2.1 dB/km.
- ------------------------- ----------------------
- --------------------------------------------------------------
Attenuation vs. Wavelength
- --------------------------------------------------------------
- --------------------- ------------------- --------------------
Range Ref. lambda Max Increase The attenuation in a given wavelength range does
(nm) (nm) alpha (dB/km) not exceed the attenuation of the reference
wavelength (lambda) by more than the value alpha.
- --------------------- ------------------- --------------------
- --------------------- ------------------- --------------------
1285-1330 1310 0.1
- --------------------- ------------------- --------------------
- --------------------- ------------------- --------------------
1525-1575 1550 0.05
- --------------------- ------------------- --------------------
- -----------------------------------------------------------------------------
Attenuation With Bending
- -----------------------------------------------------------------------------
- -------------------- ----------------- ----------------- --------------------
Mandrel Number of Wavelength Induced The induced attenuation due to
Diameter Turns (nm) Attenuation fiber wrapped around a mandrel
(nm) (dB) of a specified diameter.
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
32 1 1550 0.50
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
75 100 1310 0.05
- -------------------- ----------------- ----------------- --------------------
- -------------------- ----------------- ----------------- --------------------
Less than or equal to
75 100 1550 0.10
- -------------------- ----------------- ----------------- --------------------
o Cable Cutoff Wavelength (lambda ccf) o Mode-Field Diameter
(lambda ccf) less than 1260 nm 9.30 plus or minus 0.50 mu m at 1310 nm
10.50 plus or minus 1.00 mu m at 1550 nm
o Dispersion
Zero Dispersion Wavelength (lambda o): 1300 nm Less than or equal to (lambda o) Less than or equal to 1322 nm
Zero Dispersion Slope (So): Less than or equal to 0.092 ps/(nm squared times km)
Fiber Polarization Mode Dispersion Coefficient (PMD): Less than or equal to 0.5 psec divided by square root km
C2
- --------------------------------------------------------------------------------------------------------------------
Dispersion Calculation
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
The agreement sets forth a detailed calculation of dispersion.
- --------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL SPECIFICATIONS
- ------------------------------------------ --------------------------------
Environmental Test Induced Operating Temperature Range
Condition Attenuation -60(degree)C to +85(degree)C
(dB/km)
- ------------------------------------------ --------------------------------
- ------------------------------------------ -------------- -----------------
1310 nm 1550 nm
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Temperature Dependence 0.05 0.05
- -60(degree)to +85(degree)C
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Temperature-Humidity Cycling 0.05 0.05
- -10(degree)C to +85(degree)C, up to 98% RH
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Water Immersion, 23(degree)C 0.05 0.05
- ------------------------------------------ -------------- -----------------
- ------------------------------------------ -------------- -----------------
Less than or Less than or
equal to equal to
Heat Aging, 85(degree)C 0.05 0.05
- ------------------------------------------ -------------- -----------------
DIMENSIONAL SPECIFICATIONS
Standard Length (km/reel): 2.2 - 25.0
Glass Geometry Coating Geometry
Fiber Curl: greater than equal to 2.0 m radius of curvature Coating Diameter: 245 plus or minus 10 mu m
Cladding Diameter: 125.0 + 1.0 mu m Coating-Cladding Concentricity: less than 12 mu m
Core-Clad Concentricity: less than or equal to 0.8 mu m
Cladding Non-Circularity: less than 1.0%
Defined as: 1- (Min. Cladding Diameter divided by Max. Cladding Diameter) x 100
C3
MECHANICAL SPECIFICATIONS
Proof Test:
The entire length of fiber is subjected to a tensile proof stress greater than
or equal to 100 kpsi (0.7 GN/m squared)
Cable Selection:
The Cable jacket shall comply with applicable National Electrical Safety Code
(NESC) standards for storm loading.
PERFORMANCE CHARACTERIZATIONS Characterized parameters must be typical values.
Core Diameter: Refractive Index Difference:
8.3 mu m 0.36%
Numerical Aperture: Effective Group Index of Refraction (Neff):
0.13 1.4675 or 1.466 at 1310 nm
NA measured at the one percent power angle of a 1.4681 or 1.467 at 1550 nm
one-dimensional far-field scan at 1310 nm.
Zero Dispersion Wavelength (lambda omicron): Fatigue Resistance Parameter (nd):
1312 nm greater than or equal to 20
Zero Dispersion Slope (S omicron): Coating Strip Force:
0.092 ps divided by (nm2 times km) Dry: greater than 0.3 lbf and less than 2.0 lbf
Wet: 14 days room temperature: 0.7 lbs. (3.2 N)
C4
EXHIBIT "D"
PERFORMANCE CRITERIA
- --------------------------------------------------------------------------------------------------------------------
($ in thousands)
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------- ------------------------------------- -------------------------------------
Year (Measured from Revenue Forecast Performance Criteria
Completion Date for entire
Revenue Sharing Route)
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 1 (months 1-12) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 2 (months 13-24) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 3 (months 25-36) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 4 (months 37-48) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 5 (months 49-62) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 6 (months 63-72) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 7 (months 73-84) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 8 (months 85-96) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 9 (months 97-108) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 10 (months 109-120) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 11 (months 121-132) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 12 (months 133-144) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 13 (months 145-156) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 14 (months 157-168) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 15 (months 169-180) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 16 (months 181-192) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 17 (months 193-204) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 18 (months 205-216) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 19 (months 217-228) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
Year 20 (months 229-240) * *
- ---------------------------------------- ------------------------------------- -------------------------------------
* Confidential information has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
EXHIBIT "E"
REVENUE SHARING ROUTE
The revenue sharing route originates in the Portland, Oregon area and terminates
in Los Angeles, California, passing through Sacramento and San Francisco,
California.
EXHIBIT "F"
UTILITY COMPANY AGREEMENTS
[to be completed]
EXHIBIT "G"
UTILITY COMPANY SAFETY RULES
[to be completed]
EXHIBIT "H"
CABLE WARRANTY
FOCAS MANUFACTURER'S
LIMITED WARRANTY
FOCAS warrants that the Cable to be delivered under the foregoing
agreement will be of the kind and quality described in the order or agreement
and will be free of defects in workmanship or material for a period of three
years from the date its installation is completed and accepted by ELI. Should
any failure to conform to this warranty appear within such three year period,
FOCAS will, upon notification thereof and substantiation that the products have
been stored, installed and maintained in accordance with FOCAS's recommendations
and standard industry practice, correct such defects by suitable repair to or
replacement of the product. THIS WARRANTY IS EXCLUSIVE AND IT IS IN LIEU OF ANY
IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHER
WARRANTY OF QUALITY, WHETHER EXPRESS OR IMPLIED, EXCEPT THE WARRANTY OF TITLE
AND AGAINST PATENT INFRINGEMENT. FOCAS SHALL NOT BE LIABLE UNDER ANY
CIRCUMSTANCES FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES TO ANY PARTY WHATSOEVER.
FOCAS shall have no obligation or liability of any kind and it is further agreed
and understood that the consideration stated for those products described in the
foregoing agreement is consideration for the limitation of FOCAS's liability
hereunder.